Aussies urged to prepare finances for more rate rises

Last week's base rate increase should act as an incentive for people to get more competitive credit cards and home loan products, it has been suggested.

After last week's increase, financial experts are warning people to take steps to prepare their finances for further interest rates rises.

Indeed, an article in the Herald Sun points to predictions from a number of commentators that following the recent decision to increase the interest rate by 25 basis points, another rise could happen on Melbourne Cup Day - November 3rd - with further hikes to come.

And while rises of both 25 and 50 basis points have been predicted for this date, the publication states that however much rates go up by people should prepare their finances so that they will be able to take on higher monthly payments.

This could mean taking the time to compare accounts in order to get a better financial deal.

Nicole Rich, director of Consumer Action Law Centre, points out that as banks and other lenders offer differing rates of interest and fees on credit cards and other products it is worth shopping around for a competitive deal.

However, she claims that the cost of any exit fees - such as early termination charges - should first be taken into account before people decide to switch.

Borrowers were also advised to concentrate on paying off their credit cards while rates remain relatively low.

Meanwhile, Tammy May, director of MyBudget, states that people looking to switch mortgages need to ensure they are making the right decision.

"There's no point moving to a fixed loan or a cheaper loan without first knowing what the fees and exit costs are going to be," she tells the publication.

Prior to last week's interest rate rise, Australian Mortgage Options managing director Robert Projeski told Adelaide Now that people should prepare their finances for predicted increases by consolidating their debts, reducing expenditure and increasing the amount of money placed into saving accounts.