NEW YORK (TheStreet) -- It may not happen today when the Federal Reserve's Open Market Committee announces its decision about whether it will raise interest rates, but the first uptick in rates in nine years is coming -- soon. What should you do about it?
The answers: Look first at your mortgage. If you don't have a fixed rate, get one, said Greg McBride, Washington bureau chief of Bankrate.com. A financial clean-up to lock in low rates on other debt is also a smart idea, he said.
"Rates are only going to go in one direction," McBride said, and that's up, which will affect every interest rate you pay. "You could be looking at $100 a month between a mortgage, credit cards, home-equity line of credit, and a car loan if you buy a new one."
The math is pretty easy.
If you are risk averse, get out of your adjustable-rate mortgage, which is likely to react quickly when the Fed acts. The interest rates on ARMs are tied to either short-term Treasuries such as the one-year note, or to the London Interbank Offered Rate (LIBOR), a rate at which banks lend money to each other.
One-year Treasury yields have almost tripled since last June, but are still only about 0.25% per year. That will mean a borrower with a Treasury + 2.75% adjustable rate will see his payment climb to 3% from 2.875% (Disclosure: I have such a mortgage). That works out to roughly $3 a month more per $100,000 of loan balance on a 30-year loan. Less than 10% of U.S. mortgages carry adjustable rates, according to the New York Fed.