If we have credit card debt we should keep an eye on our post for any news on interest rates

Those of us with debts could be facing higher repayments as interest rates were raised to five per cent.

The rise means that the interest rate is at its highest level since 2008 so it will come as a bit of a shock to many.

It’s an attempt to bring down inflation after it began running wild. 

But as the cost of living crisis goes on, many of us have been turning to credit more than ever. So what does the rate rise mean for our debts?

Well, first of all we need to make sure we’re opening all our post. If our credit card providers are upping the interest we pay, they’ll let us know by letter. They have to give us 30 days’ notice and the new interest rate will apply to all the debt we have on the card – not just to new spending.

If our credit card company does decide to up our interest rate, we don’t have to accept it. We can choose to reject it – but we’ll have to pay off our balance within 60 days. The interest rate won’t change but we also can’t use the card any more.

For other borrowing, such as personal loans and car finance, the debt tends to be on a fixed rate. So it’s likely that this debt won’t change.

But private landlords may decide to increase rents as their mortgage payments rise.

On the other hand, if we have savings we might see a boost to the interest we’re paid. It’s not guaranteed though, so we should keep an eye on our accounts and what else is out there. There’s more advice on savings accounts on the Quids in! website.

Image: Pixabay