'Don't panic': Financial experts say interest rate hike won't break the bank

Financial experts say most Calgarians won't feel much pain as the Bank of Canada hikes its key interest rate to 0.75 per cent, the first increase in seven years.

"It's not going to have anywhere near the impact that a lot of people are afraid it will," financial advisor and educator Tammy Johnston told CBC News on Wednesday.

• Bank of Canada raises interest rate for 1st time in 7 years to 0.75%

"If people are dealing with a variable rate mortgage or a line of credit, for $300,000, it is only going to increase their monthly payment by $37. While nobody wants to pay more, that isn't that much."

Johnston says, perhaps more importantly, consumers need to take a hard look at their monthly bills to find far greater savings.

"I can still have the lifestyle I want but reduce my spending on things that I don't want, don't need or wasn't even aware of," she said.

"That is a better long term strategy than getting all worked up about interest rates."

Fighting inflation

The chief economist at ATB Financial says the increase, while expected, is a needed change of direction for the central bank.

"By June the tone and messaging from the Bank of Canada shifted dramatically and now, middle of July, we are seeing the first rate increase in seven years," Todd Hirsch said.

"Now moving into a monetary-tightening position, on balance, they are gauging that the Canadian economy is growing strongly enough and they want to head off inflation. It's a bit of a pre-emptive strike before inflation gains a foothold."

Hirsch says people who are at their credit limits will be impacted more than most.

"The ones who will feel a pinch are perhaps those who have maxed out on their credit cards," he said.

"They have maxed out on their mortgage because now, when they go to renegotiate that mortgageor when the terms and conditions mature, they are going to have to take on a bit more payment."

'Bleeding$200 a month'

Johnston says savings can be found every month, if you are looking for it.

"The average family is bleeding $200 a month that they don't even know about through things like unnecessary fees and not having the right plan set up," she said.

"They are spending more than they need to."

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