High inflation figures has forced the Bank of England to increase Lending rate the second time in three months. No doubt, the upbeat beneficiaries are savers, banks, home loan lending and credit card companies. For investors, the previous low rates has just gotten very attractive mainly those with index-linked accounts such as ISAs or TESSAs. For banks, they feel justified in increasing their lending rates even further. For credit providers, time to rub their hands in glee as they raise their already extortionate rates. For changing rate mortgage or loan holders, well the game just got a bit more expensive.

This unanticipated rate rise is welcome news for investors with money in the bank, chiefly those with index-linked accounts such as ISAs and TESSAS. Index-linked savings accounts yield the most when rates increase. The disadvantage here, as expected shows up when rates are lowered. With this latter increase, some of the rates on offer and indeed good, some over 9% for high rate taxpayers and over 7% for base rate taxpayers. Saving in ISAs are tax-free and you get to save a fixed amount every year. Interest is added each month depending on the prevailing rate. The more income is added each year, the more return on investment the account holder receives. Needless to say,Ordinary savings accounts have also benefited from this rate rise but not as much as their index-linked counterparts. An average of 0.15% to 0.75% has been added by banks to their rates.

Whether we like it or not, rate rises has an effect on us all directly or indirectly. Cost to business increaseIt costs retailers much more to source their goods, hence, they increase their prices. When consumers start feeling the pinch, they reign in on their spending. This in turn affects retail profits and the cycle continues. For the unlucky few, insolvency moves from being a possibility to a reality. Should this happen, the results can echo for several years. Bankruptcies remain on the record for a minimum of 7 years and sometimes even up to 10 years. During this trying time, getting credit can be a nightmare and if obtained it is usually expensive. Low interest credit cards will become a thing of the past. To make matters worse, some energy companies will install pre-paid meters once they familiarize themselves with your credit history. Pre-paying for energy whether gas or electricity is without a doubt more expensive.

Having an informative credit repair advice can help improving a bad credit history, should you happen to be in this situation to enable you to borrow at lower rates in the future. In short, legal credit repair can take a while. There are immediate things that can be done to improve credit rating, such as avoiding late payment, paying all your bills on time and many more. In the long run, you have to build trust so that future lenders can risk their money on you. Advice dished during this period include not borrowing at all this time, however, that may not be the right thing to do as it can result in no credit rating for that period. The ideal solution is to borrow small manageable amounts and make payment on time when the payment is due. Ensure the lender reports to credit bureaus so that gradually, your credit history will improve.

Bottom line is that, while interest rates increase may be advantageous to investors, generally they affect borrowers in a negative way and the consequences can reverberate for a long time to come, both in people's personal lives and businesses.