What To Do When Interest Rates Are Rising?

man holding open wallet empty

As interest rates continue to rise in Australia, it can be challenging to determine what steps to take to protect your finances. Luckily, there are a few strategies you can consider to help you prepare for rising rates and ensure that your finances remain stable.

Paying your loans fast is the first thing to do to deal with rising interest rates. Also, properly managing your finances and investments is crucial. The main idea is to stave off anything that might deepen the financial pitfall.

This article will explore strategies you can implement to fight rising interest rates in Australia. We will also discuss important topics like trigger rates and how interest rates work. So without any further ado, let’s get started.


What Should You Do To Deal With The Rising Interest Rate?

Rising interest rates can be a concern. But there are ways you can deal with this situation effectively. As discussed above, paying off your debts should be your first priority. Careful investments and reducing risks are other tricks to tackle the situation. Let’s take a look at them in more detail:

Pay Off Debt

Paying off your debts is one of the best ways to mitigate the impact of rising interest rates. Prioritize paying down your high-interest debt first, such as credit cards, as this will help you save the most money.

If you have multiple debts, try using the debt avalanche method, which involves first attacking the debt with the highest interest rate. Alternatively, you can use the debt snowball method and pay off the smallest debt first.

Pick Investments Wisely

When interest rates start to rise, reviewing your investment strategy is essential. Low-risk investments like treasury bonds, certificates of deposit, and money market funds are often safer bets in rising interest rates.

Higher-risk investments like stocks, real estate, and commodities may provide higher returns in the long run but also carry more risk. Make your research and select investments that align with your risk profile and financial goals.

Reduce Expenses

Creating and following a budget is crucial to ensure you have enough money to cover your expenses. Tracking your spending will help you identify opportunities to save money and reduce costs. Unnecessary expenditures are one of the key reasons behind going broke. When the interest rate increases, the impulsive expense should be a total no-no.

Consider taking advantage of discounts, coupons, loyalty programs, and other cost-saving measures. It can be things such as lowering your utility bills or eating out less often. If you can cut down all the expenses that are not essential, you can gain the upper hand in your battle against rising interest rates. Doing so can make a big difference in your bottom line.

Find Ways To Increase Your Income

If you’re having difficulty making ends meet, consider ways to increase your income. Taking on a second job or starting a side hustle can help to bring in additional funds. Additionally, look around your home and see if there are any items you no longer need or use that you could sell.

You could also take surveys or do freelance work to supplement your income. Focus on learning technology-based skills such as web development, web designing, motion graphics etc.

These skills have a high-demand market, and you can easily make a hefty amount of money. You can find ways to make ends meet with extra effort and creativity.

Ready An Emergency Fund

Having an emergency fund can be a lifesaver during times of financial hardship. Aim to save at least three to six months of essential expenses in an emergency. Automating your savings can make it easier to build your emergency fund—consider setting up automatic transfers from your checking or savings account to your emergency fund.

An emergency fund can provide financial stability and peace of mind and help you stay afloat during tough times.

Reduce Risk

As interest rates rise, conservative investments will start offering higher returns than ever before. However, at the same time, the prices of high-yield instruments will likely drop more steeply compared to government issues.

This means that the risks associated with high-yield investments could quickly outweigh their superior yields compared to low-risk alternatives. So, carefully weigh the potential rewards and risks before investing in high-yield sectors.

Consolidate Your Debts

Debt consolidation is a very effective way to regain control of your finances and get back on track. It can help you pay off your debts faster, reduce monthly payments, and make managing your finances easier.

With debt consolidation, you can combine all your debts into one simple loan with a single monthly payment that’s easier to plan and budget.

Having one loan to manage, you won’t have to worry about juggling multiple payments and due dates. Debt consolidation is a fantastic option to cope with increasing interest rates.

We here at ETF capital provide debt consolidation services at an affordable rate to help Australians like yourself manage their debts in these troubled times.



When interest rates in Australia are rising, staying informed, reviewing your financial goals, and adjusting your finances accordingly is crucial. It would be best if you got rid of your debts as soon as possible.

Increasing interest rates shouldn’t be a concern if you can manage your finances properly.