Money Crashers: What Do Rising Interest Rates Mean for You?

Interest rates have been at near-zero levels for so long, everyone's kind of started to get used to it. Now that the Fed has finally started to slowly, slowly edge interest rates back up again, you keep seeing panicky stories about what the rising rates are going to do to the stock market and the economy as a whole.

So I thought maybe it wouldn't be a bad idea to write a nice, calm, thoughtful story about what rising rates actually mean for consumers—both good and bad. Because yes, there definitely is an upside, especially for frugal folks like me who have been frustrated over the past decade that all the money we're keeping in the bank hasn't even earned enough interest to keep pace with inflation.

My new Money Crashers piece explains how rising interest rates could affect:

• Borrowers, who will now pay more on credit cards and variable-rate loans (but not on fixed-rate loans, like student loans or most mortgages);
• Savers, who will once be rewarded for keeping money in the bank;
• Home buyers, who will probably pay a higher rate for a new mortgage, but will also probably pay less for the house itself;
• Investors, who will see better returns on bonds, but more volatility in the stock market (though probably not the long-term losses that panicky investors are expecting);
• The overall economy, which could see a drop in consumer spending in the short term, but—surprise!—is actually likely to grow in the long term;
• The national debt, which has reached ridiculous levels and will become more and more costly to service, eating up a bigger and bigger share of our federal budget until...well, no one really knows what, if anything, the federal government will actually do to fix the problem, but it's not likely to be any fun for anyone concerned.  

Then I outline some steps ordinary consumers can take to adjust to the new normal (which is actually the same as the old normal, for those who are old enough to remember it), such as reducing debt, locking in interest rates on any new debts while they're still relatively low, shuffling investments, and building an emergency fund and plenty of insurance to get them through hard times if and when they hit.

Here's the whole, non-panicky story: What Do Rising Interest Rates Mean for You? – Effects & How to Prepare