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How to Cope with an Increase in Interest Rates

When interest rates rise, many people have a tendency to panic about how they will manage their money and how they will cope with the increase in outgoings that they will have. If you have a lot of loans or owe a lot of money, then it could have an impact on you.
The first thing to do is not to panic. If the rate rise is small then it may not have a significant impact on you anyway. Lenders are likely to increase their rates in line with the increase in Bank of Emgland base rate but they do not have to, so you may find that not all of your rates will go up and they may not go up as much as the bank rate has. It is wise to be prepared though, hope for the best and prepare for the worst is a good motto.

It is really wise to compare rates between different lenders and see whether it is worth you switching to a different one. Although they may have all gone up, you could find that there will be some that are still cheaper than what you are paying at the moment. This change could offset any rate increase and mean that you will not see any difference in your financial situation at all.

It can also be wise to take a look at your finances and see whether you can reduce your spending in other areas as well. You may be able to switch companies, retailers or providers to reduce what you are paying out on all sorts of things from electricity to milk. It is worth comparing prices for lots of the things that you buy and see whether you can spend less. It will take time but you will be able to look at each of the different things that you buy and see whether you can spend less on them. All of these small savings will add up and you will be able to manage your money better. It will take time to look into it and your shopping may take longer than normal while you take the time to compare the prices of all of the different things. However, once you are used to doing it, it should be a lot easier for you and you will be able to do it automatically or have a better idea of what to buy if you want to save money.

If you already spend the least amount of money that you can, you might want to try to earn more money instead. Many people are not able to ask for a pay rise, or take out a loan, but it may be possible to work extra hours and get more pay that way. You may be able to take on a second job, perhaps some freelance work or work from home or maybe even take on an evening or weekend job. If you do not want to work extra hours you could consider renting out a room of your home, selling things or starting a business to earn more money. There are many different options available for you and so you should be able to find something that you will enjoy doing, have the skills for and will enable you to get some extra income.

Rates tend to rise quite slowly when they do rise and so it is not worth panicking about them. The media will often quote figures about how much worse off people will be, but you need to just look at your own personal situation and not worry about that. Think about how much it will actually increase your bills and whether it is something that will be able to manage. You may find that it will be a lot easier than you thought. It is worth though, checking to make sure that you can manage and if not, then looking at your spending to see whether you can reduce it at all. Otherwise it may be possible for you to find a way to increase your income so that you can cover that extra expense. Spend time logically working through your options so that you do not have to worry and panic but find a suitable solution that will allow you to manage without an excessive amount of stress.

Is it Better to pay Insurance in Instalments or in a Lump Sum?

When you take out some types of insurance you will have the choice of paying it in one yearly lump sum or in monthly instalments. There are many reasons for doing each of these and you need to decide which you think will work best for you.
In most cases the monthly instalments will be a more expensive option or repaying your mortgage. You will find that they charge interest to the monthly payments so if you go for the lump sum option you will not have to pay this extra. However, there will be some where there is nothing extra to pay if you pay it monthly compared to paying it yearly.

If monthly and yearly payments are the same overall then it could be wise to pay it monthly. This is because it will be easier for you to manage your money and you will be able to pay it as you get paid rather than having to find it all at once. If you have the money available, then it will be better to keep it in a savings account and earn the interest rather than pay it all to the insurance company in a lump sum. As long as you are confident that you will not spend it and that you will still have enough to pay the monthly instalments then this can work out well.

Normally monthly instalments are dearer than paying in a lump sum. In this case it is worth calculating how much extra you will have to pay if you pay in instalments and this will allow you to decide whether you think that it is worth it or not. If you do have the money available, you can calculate how much money you would make if you kept it in a savings account compared to how much you would save if you paid the insurance in a lump sum. You will then be able to work out which will give you the best deal financially.

There will be a lot of people who cannot afford to pay the insurance in a lump sum and so will have no choice but to pay it monthly. It may feel that you are then in a situation where you will have no choice, but there are some options you could look at which might help you to make things cheaper. Insurance companies do vary a lot in how much they charge and so if you can find one that is cheaper this will help you to save some money. You can compare the prices of different companies online. You will find that there are comparison websites where you can compare a number of companies. Although these are useful, they tend to only compare companies that give them commission and will only have a selected few. Some companies can only be dealt with directly and some go through brokers so it is worth doing quite a bit of research so that you can check whether you can save a significant amount of money.

So although it may just seem that paying a lump sum will be better there are circumstances where it may not be. Make sure that you compare prices first and find the insurance that offers the best value for you. Look at how much it will cost to pay monthly compared to in a lump sum and see whether there are any companies that offer monthly payments free of interest still at a competitive rate. Also decide whether paying the lump sum really is the best option for you as this will depend on what else you might be doing with the money and whether that will give you a better return. There is a lot to think about, it is not necessarily as simple as it seems and it will also depend on