Worried about the rate rise? Here’s what you can do to get ready for higher rates

If you’re feeling stress over the upcoming Reserve Bank rate increase, you’re far from alone. New findings from CommBank show 90 per cent of Australian homeowners are feeling something similar, taking steps to prepare for the upcoming rate hike.

A raise in rates can impact your wallet in more ways than one. For example, you might feel this in higher variable rates for home loans and more expensive home loan repayments, and sometimes higher rates can influence the cost of other personal finance products such as personal loans. This also feeds directly back into the cost of living, already causing Australians financial stress.

Don’t find yourself caught out - get ahead of rising rates before they get on top of you. We’ve compiled some tips to help prepare yourself for handling higher rates.

Reducing your cost of living

Almost half of Australian homeowners were already taking this step, and it’s never a bad idea to examine the cost of living at a time when rates are on the rise. From taking advantage of cashback and rewards programs, shopping sales and offers, and looking into ways to reduce daily spend, it’s a great time to shake things up.

Building up your savings

Adding some extra cash to your savings account adds a buffer to your finances. Keeping aside something untouched allows your money to stay solid through a more volatile period. 42 per cent of homeowners have already found themselves adding to their savings in advance of a rate rise.

Switch up your service providers

It might be easier to stay loyal to one brand, but switching things up can lead to significant savings. By comparing and switching energy providers, get a better deal on the services you use in your day to day life.

Making additional loan repayments

If you find yourself with some extra cash, an additional repayment can help you get in total control of a loan. Whether your loan is fixed rate or variable, making a repayment when you know you can is always going to be better than playing it by ear.

Aligning loan repayments with your pay

Make sure your loan is lined up with your life. With higher rates come higher repayments and these can be a struggle when they fall out of sync with your pay cycle. Lining up repayments with a monthly pay cycle allows you to optimise the timing of your payments, making sure you aren’t left in the cold a few weeks down the track.

Stay cool in the face of rate hikes with our guide to making sense of rising rates. Track the bank response to the rate increase to see how this will impact you.