👨‍🎓 What happens when interest rates rise?

**15/52** Macro Mornings Education

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👨‍🎓 This is part of a 52-week series on macroeconomics designed to build your knowledge step by step. Feel free to catch up on previous emails here if you'd like to start from the beginning!

Dear all,

We’ve discussed the relationship between interest rates and inflation, and now it’s time to explore what happens when interest rates rise and how it impacts your finances.

Rising interest rates can have far-reaching effects on the economy and your personal financial situation. Here’s what you need to know:

1.     Borrowing Costs Increase: One of the most immediate impacts of rising interest rates is that borrowing becomes more expensive. Whether you’re taking out a mortgage, a car loan, or using a credit card, higher interest rates mean you’ll pay more in interest over the life of the loan.

For example, let’s say you’re considering a $300,000 mortgage. At a 3% interest rate, your monthly payment would be around $1,265. If the rate increases to 5%, that p…