As if life isn't already expensive enough with the steep real estate costs, ever increasing gas prices, and the cost of living going up to match the minimum wage increases; we now can look forward to an increase in interest rates from the Bank of Canada.
The Bank of Canada is our country's central bank that controls the base rate of all loans (aka the prime rate). Any lender across Canada (banks, credit unions, car loans, student loans, etc) gives you your personal interest rate based on the one set by the Bank of Canada. So as the Bank of Canada prime rate moves up or down, so does the rate of interest you pay on your loan.
With that in mind, effective today the prime rate has moved from 0.5% to a whopping 0.75%, with a second increase predicted to happened in October. While the numbers themselves seem small, the effect it can have on some of your debt could be staggering.
Anyone dealing with a student loan, mortgage, line of credit, car payment, or credit card debt could find themselves subjected to payment increases. For those with a fixed (or locked in) rate you should find that your payments should mostly stay the same. For anyone with a floating rate (one that is open to change) you can absolutely be subjected to the increase.
The best way to find out if your payments will be going up and to find out exactly by how much, is to check out your loan statement and contact your lender for more information.