Interest Rates

Will Interest Rates go up this Year?

There are many people that have been thinking about interest rates lately. Whether they go up or down can have an impact on people and the impact that it has will depend on whether they have loans or savings. Anyone with a loan will find that if interest rates go up then it is likely that their loan repayments will also go up and there a rise in rates will cost them money. However, anyone with a savings account will find that a rise in rates will give them a better return on their savings and will therefore be beneficial to them. A rise in interest rates will also have a knock-on effect on spending as it will encourage savers to save more as they get better rewards for saving and those borrowing money will have less money to spend. This will generally keep spending lower and that will prevent process rising too quickly as retailers can afford to increase prices if people have a lot of money to spend.

Predicting rate rises
It can be quite tricky to predict interest rate rises. If the rates are low then it is more likely that they will go up. However, there have been periods where the rates have stayed very low for a long time and then gone even lower. Therefore, that is not always a good wat to predict them. You could also feel the opposite and that if rates are high and have been for a long time them there are unlikely to go up, but again this has happened so it is not a guaranteed predictor.

Economists will often make predictions about what might happen in newspaper reports and this could be something to look out for. However, they are not always right and so you should not completely depend on what they say. They will obviously use their experience to make predictions, but things might change and therefore their predictions will not be correct. They are more likely to be correct than someone that is not an expert in this field though and so it is worth seeing what they might think.

The head of the Bank of England is on the committee that decides whether interest rates will change. He will sometimes give a statement and explain what might happen with regards to interest rates. As he is influential in the bank and votes on whether the rates should change then his thoughts could be really important.

Preparing for rate rises
It can be wise to prepare for rate changes just in case anyway. If you are paying interest on loans or have savings, then it is good to be prepared for rises. Lenders such as Omacl.co.uk frequently send out advice via email when interest rates are likely to change.

If you have loans then you will need to think about whether you will be able to afford rate increases. Think about whether you normally have money left at the end of the month and if this will be enough to cover any increases in rates that you will need to be covering the cost of. If you are not sure how you will cope then maybe you should not take out a loan at the moment. If you already have one then it could be a good time to look into what you might be able to do in order to make sure that you can cope with it. It could be that you could look at the things that you are spending your money on and see whether you could cut down in any areas if necessary. It might also be that you could start to more consciously compare prices and see whether you can buy the things that you always buy cheaper. It can be really wise to either take action right away or have a plan to put in to place if you need to.

It can be best to actually cost things out. Work out ow much more you might be paying if interest rates go up by half a percent, one percent or two percent, something like this. Then you will know exactly how much extra you will have to pay. This will allow you to plan better as you will know exactly how much money you will need. It is always good to assume the worst and plan to make more than you will potentially need just in case. Think about different areas where you might be able to cut back. Think about which might be the easiest and which might be harder. Then if you only need to cut back a little bit then you could take the easier options but if you need to cut back more then you will have those harder options available too. It might be that you can think of ways to make more money as well as ways to spend less which could help even more.

Borrowing Money

What Time of Year is Best for Borrowing Money?

If you are thinking about taking out a loan at some point then you may wonder what time of the year might be the best to do so. There are many things that you should consider and they are likely to be personal to you although some yearly occurrences might be similar for most people.

Things to consider
Firstly it is worth considering what you should be thinking about. When you borrow money one of the most important things to be sure of is that you will be able to afford the repayments. Before you take out the loan it is wise to find out how much these repayments will be and then check your own budget to see whether they are something that you will be able to afford. Look at how long you will need to make these repayments for and try to imagine whether they are something that you will be able to afford in the future as well as now. This can be tricky especially if it is a very long-term loan.

It is worth imagining that the interest rates go up and thinking about how you might cope in this situation. Think about whether you will still be able to afford the repayments. It can even be worth doing some calculations as to how much it would have to go up for you to find it impossible to manage the repayments. This will help you in making your decision.

However, when we look at our finances to think about how much we can afford to repay, it is worth considering the time of year. We will not always have the same amount of money available to us in every month of the year and so it is good to think about this. If you are only borrowing for a short amount of time, perhaps getting out a short-term loan, then it is worth thinking about doing it at a time when you are more likely to be able to afford the repayments.

Times of the year to be aware of

For many people thy have a lot of expenses coming up to Christmas. Obviously, this will depend on whether you celebrate Christmas but it could apply to other festivals, celebration and birthdays instead. If you spend a significant amount of extra money then this is probably not a good time to also have to find the money for loan repayments. If the loan will take longer than a year to repay then you will need to think about how you might budget in order to manage those repayments. Perhaps you will need to put some money away each month towards it or cut down on your spending at the time to afford it.

There may be other times in the year that perhaps you tend to spend more money. Perhaps when you take holidays, when there are family birthdays or anniversaries or things like that. Consider whether you can identify any times like this when you do spend money. There may also be times when you have bills to pay, perhaps the car insurance, tax and/or MOT, annual services on car, boiler and things like that or when yearly insurance renewals are due. If you are not sure of when these are then it could be good to look back over previous bank statements to see. If you do not have access to these or tend to pay more in cash then you might be able to look through your paperwork if you have it still. Otherwise you should spend some time noting down these things before you consider getting a loan so that you can look for trends in spending pattern and see whether you need to be aware of any particular times being more expensive.

It is also important to make sure that you check for any times when you get a lower income. Most people are in jobs where they et paid a consistent amount all year, but some are not. You may do seasonal work or are self-employed and find that some times you have less money coming in than others. It is worth checking and considering this as well as it could make a significant difference to how easily you can afford a loan repayment. So in answer to the question posed, there is likely to be a time of the year when you are more easily able to afford a repayment but this will not be the same time for everyone. Think about you own personal finances and then you will be able to see when might be the best time to take out a loan and when you might be better off waiting. It can be worth taking the time to do this as it can make a significant difference to how easily you can manage your repayments.

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