10 Things to Watch When Interest Rates Go Up - Part 4

Find out how rising interest rates affect bond prices, home mortgage rates and more.

Potential Drop in Credit Rating
Increases in interest rates can put a strain on people who are already struggling to make their mortgage and credit card payments. Therefore, when interest rates increase, borrowers' credit scores may drop.

Schulz warns that rising interest rates and debt levels can only be sustained for so long before they force consumers into default.

"At this time, we have not noticed a significant increase in delinquencies generally. They're tending in that direction, but I expect to see an uptick in late payments, which will lead to a drop in credit scores "His words.

Increases in the Cost of Personal Loans
Interest rates on personal loans are currently low, but this could change in the future.

Many facets of life are impacted by interest rates, as Schulz points out. "It raises the initial cost of a car and, eventually, the cost of a home. Personal loans for the purpose of consolidating debt or paying off a credit card balance qualify."

If a large upcoming purchase has you considering a personal loan, then read on. Plan ahead and secure a lower rate.

It's Possible the Fed Will Do Something

The Federal Reserve can take action to restore economic equilibrium in situations like this one.

Consumers who are aware of these moves will have a better understanding of the national economic situation and be better able to make decisions about mortgages and other forms of debt.

Keep an eye on the Fed's rate hike forecast and adjust your strategies as needed.

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