Could interest rates rise again? What it means for your debts

UK inflation rose to 3.5% in the 12 months to September 2026, up from 3.1% in August, the Office for National Statistics reported on 21 October. That’s the highest rate since October 2025. Motor fuels made the biggest upward contribution. The figures have put the spotlight on what the Bank of England does next, and on what a rise would mean for people who are already behind.

What’s happened

At its September meeting, the Bank’s Monetary Policy Committee voted by six votes to three to keep Bank Rate at 3.75%. The three who disagreed wanted to raise it to 4%.

The Bank’s own staff expected inflation to keep climbing, to around 3.75% in the last three months of 2026 and slightly above 4% in early 2027.

The next decision is on 5 November. A Reuters poll of economists, published on 15 October, found that 54 of the 63 who took part expected a rise to 4%. That’s a forecast, not a decision. The committee could hold rates again, and this article explains what to do either way.

Which debts change if Bank Rate rises?

Mortgages

Tracker mortgages move with Bank Rate, so a 0.25 percentage point rise usually means a higher monthly payment soon after. With a standard variable rate, your lender chooses whether to pass the rise on. If you’re on a fixed deal, nothing changes until it ends. MoneyHelper suggests contacting your lender about six months before a fixed deal finishes to see what rate you could move to.

Mortgage arrears are a priority debt, because you could lose your home.

Credit cards, overdrafts and loans

Credit card and overdraft rates can go up, but they usually aren’t linked directly to Bank Rate. A few cards are, so check your terms. Most personal loans have a fixed rate, so your payment shouldn’t change. If you’re paying mostly interest on a card, read can’t pay your credit card? for the FCA’s persistent debt rules.

Debt solutions

A rise won’t increase debts that are already in a formal solution. GOV.UK says a Debt Relief Order means you stop making payments towards your debts, including interest, for 12 months. In an IVA, interest and charges are frozen while the arrangement runs. In bankruptcy, any payments are based on your spare income, not on interest rates.

A debt management plan is different. Creditors often freeze interest, but they don’t have to.

What it means for you

Even if all your debts are on fixed rates, higher prices still squeeze your budget. Petrol, food and bills cost more, so there’s less left for debt repayments. A rate rise on top of that can tip a tight budget into arrears. The sooner you act, the more choice you usually have.

What to do now

1. Work out a budget. List your income and essential spending, and see what’s genuinely left over.
2. Pay priority debts first. Rent or mortgage, council tax, energy and court fines come before cards and loans. Read priority debts.
3. Talk to lenders early. If you think a payment will be a problem, say so before you miss it. FCA rules say lenders must treat you fairly if you’re in financial difficulty.
4. Don’t borrow to repay. New credit to cover old debts usually makes things worse.
5. Ask about Breathing Space. A debt adviser can apply for Breathing Space, which pauses most creditor action and freezes most interest and charges for 60 days while you find a longer-term plan.
6. Compare your options. A payment plan, DMP, DRO, IVA or bankruptcy each suits different situations. See debt solutions compared, or try our DRO checker if your income is low and you don’t own much.

You can get free help from MoneyHelper and debt charities.

Frequently asked questions

Will my credit card interest go up if Bank Rate rises?

Not automatically. Most card rates aren’t directly linked to Bank Rate, but providers can still change them. Check your terms or your latest statement.

I’m on a fixed-rate mortgage. Do I need to do anything?

Your payment won’t change until the deal ends. Check the end date, and plan for a possible higher rate if it finishes in the next year.

Does a rate rise affect my car finance?

Usually not. Most hire purchase and PCP deals have a fixed monthly payment for the whole agreement.

When is the next Bank of England decision?

The next decision is on 5 November 2026. The Bank publishes the full schedule of dates on its website.

Sources

• Office for National Statistics, Consumer price inflation, UK: September 2026
• Bank of England, Bank Rate maintained at 3.75%: September 2026 Monetary Policy Summary and Minutes
• Bank of England, Monetary Policy Committee dates for 2026 and 2027
• MoneyHelper, How to prepare for an interest rate change
• GOV.UK, Options for dealing with your debts: Debt Relief Orders
• GOV.UK, Options for dealing with your debts: Individual Voluntary Arrangements