Skip to main content

Riding Today's Rate Waves

By: One Nevada Credit Union / 07 May 2018
One Nevada Credit Union

Surfing can be a great analogy for life. As any stoked wave rider will tell you, surfing is all about catching a tasty wave, riding it as far as you can, then wiping out with style. However, riding atop credit card balances and other loans can get a little tricky, and a whole lot more expensive, when you mix in rising variable rates.

A variable interest rate is when the APR1 on your loan changes based on market rates. As you may have heard, the Federal Reserve is expected to raise America's prime rate for loans. It's estimated that even a quarter percentage-point hike could cost consumers an additional $1.5 billion in interest over the next year. With so many Americans living paycheck to paycheck, it's easy to see how even a small rate hike can affect countless families.


Think about how much credit card or other debt you have with a variable interest rate. If you're carrying too much variable interest rate debt, even a small rise could put pressure on your budget. Here are a few ways you can balance your finances before they balance you.

LOCK-IN BEFORE THE WAVE If you're riding comfortably at a certain interest rate, find a way to lock it by consolidating that debt into a fixed rate loan. One Nevada offers Personal Loans or Home Equity Loans that lock your rate and monthly payments.

BUILD AN EMERGENCY FUND The reason many U.S. families get into credit card debt isn't only due to overspending. It's because families don't have emergency savings. When something unexpected happens, people pay for it with a payday advance, credit card or other form of variable interest rate credit. That balance is then paid for over time, which means the interest charges continue to grow. By building an emergency fund, you can help avoid this pitfall.

PAY YOUR BALANCES IN WAVES This method can help you pay off your loans faster. First, make the minimum monthly payment on all of your loans, except the one with the highest interest rate. You'll want to make the minimum monthly payment on that loan too, plus whatever else you can add to it. If the minimum is $100/month, and you can add another $50 to it, do so.

Once that balance is paid off, take the full amount you were paying and add it to the loan with the next-highest rate. You'll be making the minimum monthly payment on that loan, the minimum monthly from the prior loan, plus your additional payment amounts. You'll be surprised how quickly this can pay off a handful of loan balances.

Repeat as necessary until all of your variable interest rate loans are paid in full. You can even automate those payments using One Nevada Online and Mobile Banking.

GET ADDITIONAL ADVICE The BALANCE Financial Fitness Program at can help you ride the rate wave and improve your financial wellness.

1 APR=Annual Percentage Rate

Follow us on Twitter and Like us on Facebook to stay in touch and for the latest updates!

Find more readings

Leaving Site

You are leaving the One Nevada Credit Union website.

We cannot control the content of other internet sites. Links from our website(s) are intended to serve as a benefit to our members and are offered on an as is basis. We are not responsible for the accuracy, security, or content of site links. We encourage our members to view privacy and security disclosures on all websites they visit.