5 Wise Money Moves Before the Fed Starts Raising Interest Rates Again

5 Wise Money Moves Before the Fed Starts Raising Interest Rates Again

Sigrid Forberg  Tue, November 9, 2021

Chairman Jerome Powell (pictured) and the other policymakers at the Federal Reserve just said again, after their recent November meeting, that they'll keep holding a key interest rate near zero. Though the economy has been making gains, the officials want to sit tight a little longer.

But rates won’t stay low forever. As the economy recovers from the worst of the COVID-19 pandemic, inflation is rising and more people are getting back to work. So, the Fed has indicated a rate hike could come as soon as next year — moved up from previous plans to wait all the way until 2024.

For consumers, that means now may be the time to splurge on something fun or take out a loan for something necessary, like a new car to replace an old pile of junk that won't start anymore.

Here are five money moves you should make before rates rise.

1. Refinance your home loan

Mortgage rates fell to record-breaking lows during the pandemic, but they’re slowly creeping up as the economy comes back from COVID-19.

While 30-year mortgage rates are still at historically low levels around 3%, the Mortgage Bankers Association is predicting they'll rise to 4% next year — which means it's time to stop procrastinating if you’ve been mulling a refinance.

Chances are you're still due for a refi. More than three-quarters of homeowners never refinanced at the low rates available during the first year of the pandemic, a Zillow survey found.

The same study revealed that nearly half those who did take out new and cheaper loans are now saving $300 or more each month.

2. Consolidate your debt

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