Consumer interest rates creep up

By Jen Haley, producer


NEW YORK (CNN) -- The Federal Reserve is unlikely to raise interest rates today. But as the prospects for the U.S. economy brighten, a new concern faces consumers: rising interest rates.

Mortgage rates have been slowly creeping higher. Right now rates average just over 5%. And rising interest rates could hamper the housing market's recovery.

If you have an adjustable mortgage and you anticipate staying in your house for at least three more years, consider refinancing now. It makes sense to trade away the uncertainty that your adjustable rate will reset sharply higher, in exchange for predictability of a fixed rate says Greg McBride of Bankrate.com.

And if you're in the market for a house, you may want to step up your efforts. If rates rise, that means you won't be able to afford as much house for your money.

Car loans, credit cards and home equity lines of credit will become more expensive to pay back. The average interest rate on a variable interest rate credit card has been rising for the past year. Right now the average rate tops 14% . Even a two-percentage point jump in rates is a big deal to your wallet. If you carry a balance of $10,000, you'll pay $200 more per year in interest payments alone, says McBride. And your minimum payments will rise too. So, if you do carry a large credit card balance, try to pay as much as you can over the minimum payment to get rid of that debt faster, and shop around for a lower rate card.

The flip side is that rising interest rates are good for savers. The higher the interest rate, the more money you'll eventually make on money market accounts or bank CDs. CD rates have been extraordinarily low. In fact, according to Bankrate.com, a one year CD is yielding less than 1-1/2%. It could be a while before we see more income from these investments. Even so, you don't want to lock yourself into a CD that has a maturity longer than a year or two.

Bottom line: Preserve the flexibility to reinvest your money once interest rates start to move up.

Talkback: Have you been facing higher interest rate charges? To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.41%4.44%
15 yr fixed3.33%3.31%
5/1 ARM3.34%3.55%
30 yr refi4.39%4.41%
15 yr refi3.31%3.30%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,429.44 4.59 0.03%
Nasdaq 4,104.68 18.45 0.45%
S&P 500 1,867.08 4.77 0.26%
Treasuries 2.72 0.08 3.19%
Data as of 2:53pm ET
Company Price Change % Change
Bank of America Corp... 16.21 0.08 0.50%
Facebook Inc 59.20 -0.52 -0.87%
General Electric Co 26.73 0.61 2.35%
Micron Technology In... 23.96 1.48 6.58%
Cisco Systems Inc 23.19 0.16 0.69%
Data as of 2:38pm ET

Sections

New service lets anyone transfer money up to $900 from one Walmart to another in the U.S. for a fee of $9.50. More

Obama's proposed budget would raise $1.4 trillion more revenue and increase noninterest spending by $446 billion more than current policies, the CBO said in a new analysis. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

As Detroit moves closer to reaching a bankruptcy deal, retired civilian workers are poised to be left worse off than firemen and police officers. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.