Interest Rates Expected to Rise—5 Things Your Future Self Wants You To Do Now

Katie Taylor Updated on March 24, 2018

You may not follow the financial news in your spare time, but if you're in the midst of purchasing a home or refinancing your student loans, you've probably noticed that interest rates are expected to rise.

While, yes, that could have a negative impact on your immediate financial future, you don't have to panic. As long as you're prepared, you can take action now and benefit from the continued low interest rates—because these are still low in comparison to historical rates

chart rise.jpg

(As a point of comparison, when my stepdad bought his first house in the '80s, the interest rate was 16%. Yikes.)

So how do you take advantage of today's low rates before they go up?  

1. Take stock of your finances

Of course, this is smart advice no matter the interest rates, but now is an especially good time to better understand what's going on with your finances. Make a list of all your debts, what the balances are, and what the interest rates are. This will help you identify what actions to take first. 

For instance, if you have credit card debt, you'll want to focus on cards with high interest rates. More on that later. 

2. Refinance your student loans

Have you ever talked to someone who consolidated their student loans back in the early 2000s and found yourself drooling all over their 1% interest rate? Those borrowers knew to jump on that train before the rates went up.

Now's your chance to be one of those people, or at least get a lot closer.

If you have student loans with an interest rate over 4% and you have good credit, you could likely lower your interest rate by refinancing with a private lender. The average borrower who refinances student loans saves $253 per month and more than $16,000 over the life of their loan.

But as interest rates go up, those savings will go down. Refinancing now could lock in those savings for the life of your loan. 

3. Buy that house or car

Obviously, you don't want to jump into a big financial decision out of the blue. But if you've been considering a home or car purchase, you may want to move forward sooner rather than later. 

Say you're able to get a $250,000 mortgage today with a 30 year fixed 4.225% interest rate. You'll pay $1225 a month for your new home. 

But if you wait and interest rates go up by just one percentage point, your monthly bill will be $100 higher. Maybe that doesn't sound like much, but it will translate to $54,000 more over the life of the loan. You'll pay $495,591 for that $250,000 mortgage. 

The short and sweet? You'll save money if you buy now. 

Imagine Life Without a Student Loan Payment... Start Saving Now!

4. Pay off your credit cards 

Remember that credit card debt you wrote down in point #1? Now's the time to cross that off. 

Pay down the cards with the highest rates first. If you're struggling to pay off a balance with a high interest rate, you can make faster progress in one of two ways: 

1. Call your credit card company and ask for a lower interest rate. You may be surprised, but this method actually works a lot of the time, especially for people with a good payment history. 

2. Transfer your balance to a 0% interest card. Only do this if you can be sure you'll be able to pay the balance off before the interest rate goes up (usually after a year). Some people find that cutting up the new card after transferring the balance helps keep them focused on the true purpose of the card: paying off the debt. 

See also: I Have Too Much Credit Card Debt — What Should I Do?

5. Refinance any variable loans  

Variable rate loans can be a good move if you're positive that your financial situation is going to improve in the future. But there's always a risk that interest rates will increase dramatically and leave you scrambling for cash.

When you know interest rates are on the rise, refinancing variable rate loans for fixed rate loans allows you to keep the current low rates going forward. Your new fixed rate may not be as low as the starting rate on a variable rate loan, but you'll avoid the risk of a skyrocketing rate in the coming years. 

Whatever your financial situation, you would probably benefit from taking at least one action while interest rates are low.

Get started by finding out how much you could save by refinancing your student loans. Your future self will thank you. 

Looking To Conquer Your Student Loan Debt?

Yes! Send Me The Savings Blueprint

About the Author
Katie Taylor

Katie Taylor is a content writer and editor with expertise in law and policy, finance, and entrepreneurship. She writes for startups and small businesses about everything from bookkeeping to telecom. Her work has been featured in The Washington Post and SheKnows.com. She is continuing to pay off law school loans and lives in Richmond, Vermont with her wife, son, and an unruly dog. Read more by Katie Taylor

Save Today With These Leading Lenders

#1 View More Details

Works with 275+ not-for-profit community lenders for higher approval chances

  • APR: 2.53% - 8.92%
  • Minimum credit score: 660
  • Refinance up to $300K
View More Details
Visit LendKey View Loan Disclosure

LendKey operates student loan programs for over 275 not-for-profit and community lenders across the country. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.

LendKey Student Loan Refinance review

  • Lightning fast rate check - 2-minute rate check with no impact on your credit score
  • More lenders, more options - see the best offers from over 275 not-for-profit and community lenders for higher approval chances
  • Life of loan relationship - With LendKey, your personal information will never be sent or passed on to third parties. Their customer service team is with you from the moment you land on their website until you've completely repaid your loan.
  • Unmatched benefits- Community lenders put people over profits and offer unique benefits like cosigner release after 12 on-time payments, interest only repayment options to keep monthly payments low, the largest unemployment protection period in the market, and more.

Get a personalized quote from LendKey now.

#2 View More Details

Offers unemployment protection and career/coaching/networking

  • APR: 2.500% - 8.074%
  • Minimum credit score: 650
  • Refinance up to 100% of student debt
View More Details
Visit SoFi View Loan Disclosure

SoFi, which stands for “Social Finance,” was created by a group of Stanford business students who found themselves with a mountain of debt after graduation. They set out to change the student loan industry and help borrowers like themselves to get lower interest rates. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, it has no maximum amount you can finance. However, Nevada residents can’t currently refinance with SoFi. Minimum loan balances are higher in Arizona, Massachusetts and Pennsylvania due to state laws. Additional state restrictions may apply.

SoFi Student Loan Refinancing Review

  • Low interest rates - For well-qualified borrowers, SoFi offers some of the lowest rates we have found.
  • Strong customer service - It has more than 350 customer service reps available to help applicants through process.
  • Career coaching and networking - Perks include career services representatives who can help you find a job or negotiate a higher salary. SoFi also hosts networking events, happy hours and educational lectures on topics like buying a home in major cities around the country.
  • Unemployment protection - Borrowers who lose their jobs through no fault of their own may apply for Unemployment Protection. If approved, SoFi will suspend their monthly SoFi loan payments and provide job placement assistance during the forbearance period. These benefits are offered in three month increments, and are capped at 12 months, in aggregate, over the life of the loan. Note that interest will still accrue while loans are in forbearance.

Find out what interest rate SoFi can offer you here.

#3 View More Details

For every loan they fund, they contribute to the education of a child in need

  • APR: 2.48% - 6.25%
  • Minimum credit score: 660
  • Refinance up to $500K
View More Details
Visit CommonBond View Loan Disclosure

CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.

Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.

CommonBond Student Loan Refinance review

  • Unemployment protections - If you lose your job or decide to go back to school, you can delay your payments for up to 24 months.
  • Social promise - For every loan they fund, they also contribute to the education of a child in need.
  • Hybrid loan option - Offerings include a 10-year hybrid loan with fixed interest for the first five years, and variable interest for the final five.
  • Referral bonus - For every friend you refer who refinances their loans with CommonBond, you’ll earn a $200 cash bonus.
  • Qualification - Borrowers must have graduated at least 2 years prior if they want to apply without a co-signer. And borrowers in 6 states – Idaho, Louisiana, Mississippi, Nevada, South Dakota, and Vermont – cannot currently refinance through CommonBond.

Get a personalized review of your refinancing options with CommonBond today.

#4 View More Details

Earnest empowers people with the financial captial they need to live better lives.

  • APR: 2.50% - 7.89%
  • Minimum credit score: 650
  • Refinance up to $500K
View More Details
Visit Earnest View Loan Disclosure

Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.

  • Commitment-free 2 minute rate check
  • Client Happiness can be reached via in app messaging, email, and phone 
  • No fees for origination, prepayment, or loan disbursement
  • Flexible terms let you pick your exact monthly payment or switch between fixed and variable rates
  • Skip a payment and make it up later
  • Online dashboard is designed to make it easy to apply for and manage your loan

Click here to apply with Earnest and to see how much you can save.

#5 View More Details

Operates in all 50 states; 2nd largest student loan refinancing lender

  • APR: 2.50% - 7.02%
  • Minimum credit score: 660
  • No refinancing amount maximum
View More Details
Visit Laurel Road View Loan Disclosure

Laurel Road is a national online lender with customers in all 50 states, the District of Columbia, and Puerto Rico. Many of our non-bank competitors are not able to lend in all 50 states.Laurel Road has grown to be the second largest player in the student loan refinancing space in large part because of our reputation as the go-to low rate provider.

Laurel Road Student Loan Refinance Review

  • National reach - Online lender that is available in all 50 US states, the District of Columbia and Puerto Rico.
  • No fees & the lowest rates in the space - Laurel Road is the most transparent about the rates they provide customers, and offer the lowest rates where it counts. Our customers will save more than $20,000 over the life of their loans on average. 
  • Customer service reputation - Laurel Road's customer service representatives are no rookies. With 19 years of experience on average, Laurel Road’s Customer Service team delivers an experience that is best in the industry. They work to build meaningful, life-long relationships with our valued customers to improve their overall financial wellness.
  • The stability & security of a bank - They are a division of Darien Rowayton Bank, a stable and secure FDIC-insured bank, regulated by the FDIC and the Connecticut Department of Banking.

Get your personalized, pre-approved rates in less than 5 minutes.

#6 View More Details

Special offers for medical resident and fellow refinance products

  • APR: 3.10% - 7.84%
  • Minimum credit score: 670 w/cosigner
  • Refinance up to $350K
View More Details
Visit Splash View Loan Disclosure

Splash Financial is a leader in student loan refinancing with new rates as low as 3.25% fixed APR which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.

  • Low interest rates – especially for graduate students
  • No application or origination fees. No prepayment penalties.
  • Co-signer release program - you can apply for a cosigner release form your loan after 12 months of on-time payments
  • Specialty product for doctors in training with low monthly payment

Click here to see more of Splash's offerings and to see how you can save money.

Save on Your Student Loans
$
$
Article Topics

Looking To Conquer Your Student Loan Debt?

Yes! Send Me The Savings Blueprint

More Articles in Refinance
The Best Companies To Refinance Your Student Loans Save Money Now
Additional Resources
Comments

"I reduced my student loan payment by $152 per month, by refinancing thru Comet"

Save Money Now