6 Money Moves to Make Before a Potential Rate Hike
Money Girl
Macmillan Holdings, LLC
4.6 • 1.8K Ratings
🗓️ 27 May 2026
⏱️ 12 minutes
🧾️ Download transcript
Summary
1022. If you were expecting interest rates to drop, rising inflation is making it more likely for them to go up this year. Laura reviews six moves you shouldn’t overlook in a rising-rate environment to make your money work harder for you.
Key takeaways
- When inflation rises, the Fed raises interest rates to slow down spending and demand, eventually causing prices to decrease so spending increases.
- With sticky inflation and the expectation of rate hikes, borrowers need to watch interest rates on their debt, using a tool like my PFS.
- When variable-rate debts, such as credit cards, increase, it’s wise to pay them off faster and reduce the interest expense.
- If you’re considering a large purchase, like a home or vehicle, maintaining good credit and locking in a lower interest rate sooner rather than later are wise strategies.
- Higher interest rates benefit savers, so using a high-yield savings account can maximize your earnings.
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Transcript
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| 0:00.0 | If you've been waiting for interest rates to drop before making a big financial move, |
| 0:09.8 | like buying a home or a car, sticky inflation is making a rate hike more likely this year. |
| 0:17.3 | While higher rates can be bad news for borrowers, there are upsides if you know how to leverage |
| 0:23.1 | them. In this podcast, I'll review six smart money moves you shouldn't overlook when interest rates |
| 0:30.4 | and inflation go up. These tips will make your money work harder and help offset rising prices. |
| 0:39.1 | Hey, everyone, welcome back to episode 1222 of Money Girl. I'm your host, Laura Adams. I'm an award-winning author, spokesperson, |
| 0:46.7 | and money speaker. And in the show notes, you can find links to learn more about me and how to reach |
| 0:52.2 | out. All right, let's talk about how interest rates and |
| 0:55.7 | inflation work together. You probably know that the Federal Reserve or the Fed is the central |
| 1:02.8 | bank of the United States, and it was created by Congress in 1913. While its job is pretty complex, |
| 1:14.5 | you can really break it down into two main goals. |
| 1:22.6 | Its job is to maintain a healthy economy by maximizing employment and keeping prices stable. |
| 1:29.3 | While the Fed doesn't directly set the prices of, you know, things like groceries and gasoline or the interest rate on credit cards and mortgages, it does control the federal funds rate. |
| 1:36.9 | That's the interest rate that banks charge each other. |
| 1:40.5 | And from that, the interest rates that you and I pay sort of trickle down from that. |
| 1:46.2 | And when the economy is sluggish and inflation is relatively low, the Fed lowers rates to make |
| 1:54.4 | borrowing and spending more attractive to consumers and businesses. |
| 1:58.8 | For instance, when it costs less to finance a car, you might be more |
| 2:03.4 | likely to buy one, right? But when inflation is high, the Fed raises rates to slow down the economy. |
| 2:11.1 | If it costs more to finance a car, you might delay buying one. So by cooling consumer and business spending and demand, |
| 2:20.3 | prices will eventually come down to encourage more spending. Right now, inflation in many |
| 2:26.7 | categories of goods and services is stubbornly high. We can attribute much of it to global issues like the Iran War, which has caused |
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