Avoid Paying Higher Interest

The ten year treasury hit its highest rate in four years last week. That might not ring the same bells to consumers as the "federal funds rate," but it's an important factor in measuring the health and determining the future of the economy.

So is this rise in the treasury something you should pay attention to?

"The [interest] rates that you are paying are going to go up," explains Ray Hennessey, editor of SmartMoney.com.

"There were a lot of people taking these adjustable rate mortgages when mortgage rates were so low and thinking they are going to stay low for a while. Well, now they are starting to creep up, and they are creeping up in a big way."

But fear not, Hennessey suggests three things to avoid paying more interest.

First, lock in any variable-rate loans you may have.

"It's looking like we're going to see the ten-year continue to rise and if that's the case," Hennessey says, "this is probably the lowest your going to get a rate. So lock that in now."

Second, avoid adjustable-rate mortgages. "You are going to be paying more over time."

And finally, increase your investments in fixed incomes.

"A lot of people haven't been putting money into bonds or bond funds because the yields have been too low," Hennessey explains. "Now, if you're over 5 percent, and it's the highest we've had in four years you can finally be putting your money to work in a safe way."
by Jenn Eaker