Higher interest rates expected to affect average consumer

INDIANAPOLIS — The Federal Reserve has increased interest rates, but what does that mean for you and your monthly budget? According to the experts, it will likely affect your interest rates on the credit cards you use.

"If you are carrying a balance from month to month the consumer credit is typically the first to increase,” Joe Fritters with the Indiana University Kelly School of Business said.

He says while interest rates on your credit cards are likely to go up, if you are in good standing with your credit card company, they could possibly lower the rate.

"Companies especially if you are in an enviable position that you have a good credit score and you have been a customer for a long time they might help you out,” said Fritter. “The real solution is to pay off that credit card debt. "

According to LendingTree.com, the average American has about six thousand dollars in credit card debt. Although the experts say interest rates will only rise likely by one percent, it's still something people should be addressing now.

"Maybe start looking at some consolidation credit cards for instance, because they have a lower interest rate,” Roy Lederman with Allstate Financial Services said. “Maybe looking at a consolidation plan with maybe a not-for-profit credit counselor that type of thing."

Credit cards aren't the only place the average person will see rising interest rates. If you are in the market to buy a home your interest rate will likely be higher.

One way to lower it is to put more money down. That's why Lederman said it's important to look at all your options when buying a home, especially now.

"The quicker you pay that thing off the better you are going to be in the long run financially,” Lederman said. “So, you know looking at alternative rates on the 15-year mortgage rate as well as a 20-year, may board someone very well in the long run."

As for what you can do to keep yourself on track or save more money, experts suggest getting a side job while you can.

"Jobs are easy to get now. A year from now we don't know what the economy might be,” Fritters said. “It might be a whole lot tougher to land a second job than it is right now and so take advantage of the opportunity."

Experts say we will likely be feeling the impact of the interest rate hikes from anywhere from 18 to 24 months. They said it's important to take a good look at your budget now and start trimming down on things that you can.

Also, if you are looking for a new car they said it’s important to go to the car dealership already approved for a loan. This will help you negotiate the price of a car easier.

They said it’s important to compare interest rates and shop around when you are looking for a loan. Also, now may not be the best time to refinance a home or a car. The only way they said it will make sense is if your credit score recently went up and you already have a higher than the normal interest rate.