3 things to do now before interest rates go up

The Federal Reserve announced that consumers can expect an interest rate hike in March. After two years of low rates, what will this mean for the economy and your wallet? NBC senior business correspondent Stephanie Ruhle shared three things to take way on TODAY.

"There are several different ways these rate hikes can impact you," says Ruhle. "If you're thinking about a big loan like a mortgage or a car loan, or if you have private student loans, now's a good time to make it happen or refinance. If rates go up, your net monthly payments could go up, too."

Ruhle says the same thing goes for credit card debt. "If you can pay it off now, you want to try and do that before rates go up."

Ruhle says that the reaction to a rate increase is volatile, as expected. "Low rates have been good for the stock market and things have been up and down," she says. "That's why for many Americans the stock market should be for the long game. Things like retirement, or goals that are at least five years away so you have time to recoup your losses if needed."

If you're wondering why interest rates matter to consumers, Ruhle says to think about what happened when the pandemic first hit and the Fed dropped the interest rates to nearly zero. This was done to help encourage spending in an uncertain time. "The less it costs to borrow, the more people will spend, the more money businesses can use to keep people employed."

The result was that it was much easier to get a mortgage on a home but inflation caused price hikes that hit our wallets in a hard way.

"Interest rates and inflation are closely tied," says Ruhle. "When inflation goes up, the Fed often raises interest rates to slow down that spending and borrowing and tries to keep prices from rising so fast."

Ruhle says that rate hikes have been on the horizon for a while but the good news is that it will hopefully put a pause on the inflation we've seen as of late.

"If all goes according to plan, this should help curb some of the effects of inflation," she says.

Another bonus is that if you have money in a savings account, as many seniors do, you may be in for a higher interest rate there.

Bottom line: Make those big purchases you're planning now, take out that mortgage or loan before the increase and pay off that lingering credit card debt now to avoid an interest hike.

For more great money tips, visit On the Money TODAY.