How do inflation and rising interest rates affect my money?
04/07/2023
Both inflation and rising interest rates can have a significant impact on your personal finances. Do you want to find out how?
- Inflation: Inflation is the overall rise in the cost of goods and services over time. This means that a set amount of money will not stretch as far in the future. Inflation can affect your savings, financial investments, loans, pension plans, insurance policies and other financial products. That’s why it’s important to account for its impact when planning your finances, making sure that your investments and savings generate returns above inflation to protect your purchasing power.
- Rising interest rates: When inflation rates are high, central banks tends to raise interest rates to keep it in check. This can affect the rates that banks charge on loans. As a result, if you have a variable interest rate loan, you will probably see your repayments rise. It’s important to carefully consider the conditions of your loans and think about whether changes in interest rates could affect your monthly repayments and your ability to meet your financial obligations.
In summary, inflation and rising interest rates can affect your savings, investments and loans. You should keep yourself informed and make sound financial decisions to protect your money and adapt to changes in the economic environment.
If you’re looking for advice on how to manage your finances amidst rising inflation and interest rates, you can refer to this guide (2 MB) (2 MB) published by the three European authorities (the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority) in collaboration with national authorities.
