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Now, those who will be affected are people who have adjustable rate or variable rate loans such as a credit cards, home equity line of credit, adjustable rate mortgages (ARM) and most other unsecured loans.    Credit cards will likely see the biggest increase in interest rates, then unsecured loans such as personal loans then home equity lines of credit (HELOC) and finally adjustable rate mortgages (ARM).  For many, however, the important factor is which payment will increase most.  For example, if you owe a few hundred dollars on a credit card and the interest rate that is used to calculate the minimum payment increases the effective change in payment will be minimal due to the low balance.  On the other hand, if you have a $300,000 mortgage a 1% increase in interest rate can have a much larger impact on the payment and therefore have a greater effect on your budget.

If you have a loan with an adjustable rate or variable rate now might be the ideal time to do something about it.  In many cases the best way to combat the rising rates and forthcoming adjustment on the adjustable rate loans is to use equity in your home.  Sure you might end up with a higher fixed rate then you have now but in many cases your monthly payments will still be lower.  The trick is to utilize the fixed rate and tax deductible interest from your home now, while rates are still relatively low.

We are always willing to run a free and of course no obligation analysis.  If you are concerned about your adjustable rate loans, give us a call and we will run the numbers so that you can make informed decisions about managing your debt.

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