10 Tips to Cope with Interest Rate Rises
The cost of living keeps increasing and every month the rates are rising, putting extra pressure on families. Any debt you have from a mortgage through to a credit card is impacted by the rate rises.
Considering the level of debt most Aussie households have, the increased cost of food, fuel, bills and life in general, every rate rise hurts.
So how can you cope when interest rates keep rising?
Disclosure: This post may contain affiliate links.
1. Ask for a Better Rate
It never hurts to simply call your lender and ask for a better rate. Numerous Aussies are having success with this tactic alone.
Do some research, know what is on offer elsewhere then call the bank/lender and ask if there is anything they can do. They might say no but be specific and outline the offers elsewhere and ask again.
Generally, when negotiating, they might say no at first because many people will give up after being told no. If you outline why you should get a rate cut there is a higher chance they’ll do it as they know you are serious.
This isn’t an option for everyone and can be tricky since higher rates mean lower borrowing power. Do some research yourself online and speak with a mortgage broker to check your options.
If it is a personal loan or credit card you need to refinance, the same things apply. Research the offers out there, read the fineprint and see what might work for you.
Be aware, research is ok but do NOT apply for every offer you see. Applications impact your credit score and options. So be careful about how you do it.
3. Look at 0% Transfers
Lenders often have deals for balance transfers where you can get 6 months interest free. Check the fees and charges, any minimum spend requirements etc to see if it would work for you.
While you might not clear the whole debt in that time, having 6 months interest free enables you to put more of your payments on the actual debt instead of interest.
4. Create a Debt Free Plan
Get clear on your debt. Know all the details such as how much you owe, interest rates, fees, how long you have to pay it etc.
Then create a plan to pay it off. The sooner you are debt free, the sooner interest rate rises won’t matter as much to you.
Being debt free is an incredible feeling and while it will take a lot of work to get there, it’s worth it. Check out 6 tips to easily reduce debt which include tips for dealing with debt collectors.
My preference is to pay the debt with the highest interest first. Then once that is cleared, put all the payments onto the next debt and so on until all the debt is cleared. Doing it this way means you pay less interest and is the better option financially if you can stick to it.
Many people prefer to pay off the smallest debt first because it feels good psychologically to clear a debt. If you are more motivated by doing it that way, do it. Whatever will keep you on track to clear your debt is the best option.
I already mentioned calling and asking for your mortgage. You can try to negotiate any debt though. Especially if you have financial issues.
Any debt that has gone to debt collectors is highly negotiable too. Most people want to know they are going to get their money back or at least some of it. Something is better than nothing so many can be negotiable when you get to that point.
6 tips to easily reduce debt covers how to do this effectively.
6. Do a Full Financial Review
Go over every bill you pay, every expense and review it. At the moment, it is tricky because prices keep increasing (especially at the supermarket. Check out how to reduce the cost of groceries in 2023 for tips to help with that).
Set aside some time with your bills to compare and see if you can get a better rate. Electricity, gas, insurance, phones, all of them have different offers at times.
Check out how I did a full financial review here.
7. Link Everything
Many programs now connect and you can get points or rewards from paying your electricity or health insurance etc. When comparing all your bills, make sure everything is connected to any discount, deal or rewards program you can.
For example, when I compared, Red Energy was the best option for me. Plus I get Qantas points for joining and for every bill.
If you have a healthcare card or pension card or similar, make sure it has been added to any account e.g. electricity to ensure you are getting the discount too. Check out loads of discounts you can get with your concession card.
8. Free Vouchers
Every state has discounts, vouchers and extra assistance. Have a look to see what is offered in your state and apply for any that are relevant.
There might be electricity rebates, vouchers for school expenses or sports and more. Check a full list for state-specific options and some Australia-wide here.
9. Make More vs Save More
There are only so many hours in a day so you need to decide what is the best use of your time. Many things that save money take a lot of time. But if you’re only saving $1 here and there doing something that takes you 30 minutes, it might not be worth it.
Instead, it could be worth more to find a way to make money in that time instead. It can be hard to balance at first. Once you start looking at how much time you spend on each activity and what is worth your time, you will know what to do.
Tips to Save Money
Tips to Make Money
10. Get the Family Involved
While we want to protect our kids from everything, times are tough right now. You don’t need to let them know you are struggling but you can use this time to teach some amazing life lessons.
Teach your kids how to cook, do the garden, clean and other life skills. This sets them up for life and will free up some of your time. They might not do the job perfectly but when you are time-poor and need to find ways to make and save money, remember that done is better than perfect!
Read these articles to help:
How to get the family on board with a budget
How to insource aka how to get everyone to help at home by Aspiring Millionaire covers a lot.