The new year has heralded new borrowing rate hikes which is positive or negative news depending on your financial standing. As the rate of inflation rises, the the Central Bank has been forced to raise the base rate by a quarter of a percentage. This was unanticipated, as rates were raised at least once towards the end of last year. It seems that made no impact on borrowing - particularly home loan lenders - and spending and therefore inflation thus the need for a another rate increase in such a short while.

Generally, people with nest eggs will benefit hugely from this rise but more so those with index-linked accounts. Overall, investment rates have increased by a quarter of a percent to three-quarters of a percent across board. For savers whose money in the bank is in tax-free accounts such as TESSA's or ISAs, the rates are even more attractive: some deals are currently offering as much as 9.75% on all accounts. In times like this, on can say that, an index-linked account is a fantastic choice for savvy savers, however, a downward spiral of interest rate mean the rates plunge too. Home loan holders who do not have fixed rates are probably the hardest hit by this rate increase. An average 100,000 mortgage will attract an extra 68.00 This is quite hefty considering the current energy bill increases particularly in the natural gas and electricity sector.

Although, raising interest rates has positive points - such as cooling the economy - , it is more of bad news than positive news for the average credit consumer. Some businesses have not fared well over Christmas, with consumers less willing to overspend. Bankruptcies have also increased as inflation rates combined with a myriad of factors have forced small businesses out of the market. Business receivership is dwarfed by the number of personal liquidation. Ending up bankrupt can be very trying both for businesses and individuals. Even when the difficult period seems to have ran its course, a record of it is available on your credit report for 7 years or more. This means that during this period, most major lenders will decline giving you any credit including mortgage leaving you to the mercy of loan sharks. Even low interest credit cards can prove elusive.

If you are finding it difficult, you may realise that, making small but considerable changes can help improve credit rating after interest rate rises. If you are on a changing rate for your mortgage for instance, it is adviceable to move to a fixed rate. Bear in mind that you may have to pay for chaning. Some lenders will charge you a certain percentage of your total borrowing for opting out of your contract, on the other hand some may not charge anything at all. Other charges include arrangment fees which can be a hefty sum especially if the fixed-rate on offer is a bargain. Other ways in which improve credit includes paying bills on time whether it is credit cards or energy bills as well as home loans.

In conclusion, a increase in bank rates will always have an adverse effect if you have a loan or a mortgage which is not on fixed rate. Changing this coupled with prudent spending can turn things around positively.