The Bank of England Monetary Policy Committee has voted to increase interest rates by 0.25 percent – the first rate rise since 2007.
Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said:
If you don’t already have a budget, there has never been a better time to take this step – which is probably the single biggest thing you can do to start to get to grips with your personal finances. Look at what you have coming in each month and what you need to spend your money on – remembering to include annual costs like car insurance by dividing the annual cost by 12.
This could be the first of a number of rate rises, and so if you are mortgage payer and are on a variable or tracker rate, now could be a good time to switch to a fixed deal. Everyone’s circumstances are different and it may be that you want to seek professional advice.
If you are already in arrears with your mortgage, rent or any other kind of debt, don’t delay dealing with them. With an interest rate rise you could find your costs increase and in some cases, your existing debts become more expensive, and so it is important to reduce them when you can.
Some advice that is always worth considering is to find out if you can maximise your income. That could include making sure you are claiming all the benefits to which you are entitled, making sure you are paying the right tax or looking at the hours you work. At the same time, if you are worried, re-examine your costs to see if there are any savings you could make.
Remember that you don’t need to do any of this alone. If you are worried about how interest rate rises might affect you or if you are struggling to cope with existing debts or unpaid bills, seek free advice from a charity-run service like National Debtline as soon as possible.