What to do NOW to protect your money before 4 interest rate hikes hammer households – one takes less than a minute

HOUSEHOLDS breathed a sigh of relief after the Bank of England held interest rates on Thursday, but experts are warning it will be a brief respite. With inflation rising again, economists are forecasting four interest rate hikes by mid-2027. However, there are certain things you can do NOW to protect your finances from the oncoming storm. The Bank of England is expected to raise interest rates up to four times over the next week so you need to protect your finances now Credit: Getty If there are four hikes in quick succession this means the Bank’s base rate – the benchmark for interest rates- rises from its current level of 3.75% to 4.75% or more. Interest rates often increase when inflation is rising because it makes it more expensive to borrow money, for example on a credit card or mortgage. This discourages spending and cools demand, which helps bring inflation back down. Brian Byrnes, director of personal finance at Moneybox, says: “The impact of global geopolitical events continues to filter through to economies and change the way central bank officials approach interest rates decisions. But while the prospect of rising rates can feel worrying, a few quick checks could help you feel more in control.” Here are six simple steps you can take to protect your finances now – and one takes less than a minute… Check your savings rate Four interest rate hikes over the coming months are expected to pile pressure on struggling households Credit: Getty Rising interest rates should mean savings rates also increase, so be sure to take advantage. Aim for your savings rate to be higher than inflation to make sure your cash keeps up with the cost of living. With interest rates rising, you might not want to lock up all your cash just yet. Consider a “laddering” approach where you put some money in an easy-access account, another chunk in a one-year fixed deal and another chunk in a longer-term deal. This means you can take advantage of better rates when they appear while still getting a good deal now. Alexandra Loydon, from St James’s Place, says: “High street banks tend not to be the most competitive so it’s worth searching online to see if you could get a better rate elsewhere.” Current top rates include 5% from Cahoot on an easy-access account, which you can open with as little as £1, according to Moneyfacts. If you paid in £500 after a year you would have £525. This bank pays 4.93% on its one-year fixed savings bond and 5.04% on its three-year deal. Both accounts can be opened with £500. If you put £500 in the three-year account you would end up with £579.47 Take a close look at your credit card T&Cs Transferring to a 0% credit card can help pay off debt but you need to keep on top of it Credit: Getty Credit card rates don’t typically rise with interest rates, but it’s still worth checking for a better deal. Jenny Holt, from Standard Life, says: “Higher rates can be a mixed bag, and while savers may be able to earn more, borrowers could face higher costs. It’s important not to make big financial decisions based on speculation, but do use it as a prompt to give your finances a quick health check.” A balance transfer credit card can be a good option, allowing you to move an existing balance to a new card, usually with an interest-free period. Aim to clear as much of the debt as possible during this window before any interest starts building again. HSBC offers 0% for up to 36 months, with a balance transfer fee of 3.09%. It would cost £46.35 to move a £1,500 balance to the card. Use a free eligibility calculator to see if you’re likely to be accepted before applying. Those who can clear their debt quicker could consider Santander’s Everyday No Balance Transfer Fee Credit Card. It has no fee for moving your balance but the interest-free window is only 12 months. Lock in a new mortgage deal before you need to As mortgage rates rise homeowners can lock in a new deal up to six months before their current one ends Credit: Getty Many mortgage lenders have already started hiking their mortgage rates, with others likely to follow suit soon, warns Rachel Springall, finance expert at Moneyfacts. Households coming to the end of a fixed deal should act soon. It is possible to secure a new mortgage deal up to six months in advance, with no obligation to stick with it if a better rate comes along. A fee-free mortgage broker can help you scour the market. Jenny says: “Check when your existing deal finishes and what a higher monthly repayment would do to your household budget. Knowing the date now gives you time to prepare rather than being caught by surprise later.” Doing nothing means you get moved to your provider’s standard variable rate (SVR), which is usually far more expensive than any other deal, so avoid this. The average two-year fixed mortgage rate is now 5.73%, according to Moneyfacts, up from 4.84% in March. This would add about £1,572 a year to repayments on a £250,000 mortgage with a 25-year term. Fix your energy deal Energy bills could soar an agonising 25% in January if predictions are right Credit: Alamy Energy is one of the key drivers of inflation right now. Gas and electricity prices have soared amid the ongoing Middle East conflict. Household energy bills will rise by about 4% from October, but experts say worse is to come. Bloomberg Economics warns that bills could rise by another 25% in January, potentially adding a staggering £427 a year to annual energy bills. Consider fixing your energy tariff to give you certainty over your costs. EDF has a 24 month fixed deal that matches the current price cap, but you must pay by direct debit. If Bloomberg is right about the January price cap you’ll save a whopping £487 a year. Check whether you are eligible for any help such as the £150 Warm Home Discount, and use tips to cut your usage such as turning the thermostat down by one degree. Keep putting money into a pension Try to keep up pension contributions even if you’re stretched Credit: Alamy It’s not just the financial here and now to consider when rates are rising – be sure to keep an eye on the long-term too. Those struggling with rising costs might be tempted to pause their pension contributions, but try to avoid this if possible. Even taking a small break from paying into your pension can have a big impact in the future. Research by Moneybox found that pausing contributions for just one year could mean you end up with £12,000 less at retirement. Jenny says: “Cash savings rates may look more attractive if interest rates rise, but pensions can benefit from tax relief, employer contributions and potential investment growth over many years.” ONE MINUTE MOVE Pocket some cashback Cashback sites are a great way to give your bank account a quick boost Credit: Alamy When costs are rising, it’s important to take advantage of all the freebies you can. Cashback websites are a great way to earn money on spending you were going to do anyway. TopCashback and QuidCo are popular options. Signing up takes less than a minute – just enter your email address and create a password. Search for the retailer on the cashback site and click through to make your purchase as usual. You can currently get up to £45 cashback when buying car insurance from Tesco through TopCashback, and up to 7.5% when booking a holiday from Expedia.