Depending on your financial situation, a rise in interest rates may impact your ability to pay off loans and cover other expenses. With information from the Financial Consumer Agency of Canada (FCAC), here are a few ways you can review your finances and take steps to help manage a change in interest rates.

How could rising interest rates impact you?

When interest rates rise, your loan payments will increase if:

  • you have a mortgage, a line of credit or other loans with variable interest rates
  • you’ll soon need to renew a fixed interest-rate mortgage or loan

What are the potential risks?

A rise in interest rates can be tough to manage if a large portion of your income is going towards your debts. This is because you may not be as flexible in your budget to cope with higher borrowing costs and you may have less money to put toward other expenses.

How to prepare for changing interest rates

With information from the FCAC, here are some steps to help you prepare for a rise in interest rates:

  • Cut expenses so you have more money to pay down your debt
  • Pay down the debt with the highest interest rate first so you pay less money towards interest
  • Consider consolidating debts with high interest rates, such as credit card debts, into a loan with a lower interest rate but keep your payments the same
  • Avoid getting the biggest mortgage or line of credit that you’re offered
  • Consider how borrowing more money could limit your ability to save for your goals
  • Find ways to increase your income to help you pay down debt
  • Make sure you have an emergency fund to deal with unplanned costs

Where to go for help

Preparing for changing interest rates isn’t’ something we can help with but there are other options to consider. You may be interested in speaking to your financial institution to run through some scenarios so you can see how an increase would affect your payments. They may be able to offer some advice on how to help you manage a potential increase. If you’re not sure what a rise in interest rates will look like for your monthly bills, the FCAC has some examples you can check out.

Getting calls from a debt collector?

We know dealing with debt can be stressful, especially if you’re getting collection calls. In BC, you have rights when it comes to debt collection. Not everyone’s experience with debt is the same but the rules apply to all of us. Learn your rights in BC and access tools and resources to help you on your debt journey.

Learn more

How to get the calls to stop
What to do if it’s not your debt
The rules debt collectors must follow in BC
The impact of debt on your credit report
4 ways to manage debt
Debt relief: Credit counsellors vs debt repayment agents
8 tips for choosing a debt relief service
3 simple steps to create a budget
How to save for a rainy day
How to prepare for changing interest rates

About Consumer Protection BC

We are responsible for licensing debt collectors and regulating certain aspects of the debt collection industry in BC. The law speaks to when a collector can contact you and how they can communicate with you. We can’t help with every debt related issue and we’re not financial advisors. Find out more about us and the other industries and transactions we oversee by exploring our website.