Even if you’re not one to pore over headlines, you’ve probably seen the news.

Last week it was announced that for the 13th consecutive time, and in an apparent bid to tackle rising inflation, the Bank of England has decided to hike interest rates from 4.5% up to 5%. The recent increase means that interest rates have now reached their highest level in 15 years – and are expected to continue rising.

Talk about unlucky number 13 right? Because the increase isn’t just another item on the list of the seemingly endless flow of gloomy news about the economy. Instead, it is going to have huge implications for households across the country. And the increase comes against the backdrop of an already troubling cost of living crisis that is impacting millions.

It’s not exactly the financial news that any of us wanted to hear right now – or indeed ever if I’m honest. Even if the interest rate rise does achieve its long term goal of pushing down inflation, this will only come after many households experience major financial strain as the rate impact everything from debt to mortgages.

And with women already facing higher costs when they come to buy a property (more on that below), it’s fair to say that we might find ourselves yet again disproportionately impacted by the changes. While there’s not much we can do to control interest rates – we can control our understanding of what these changes mean for us, and how we can take necessary action.

Here’s a quick Q&A to explain what the hike truly means, how it could impact you, and the practical steps you can take to manage things:

Why have interest rates gone up? The Bank is trying to deal with the rising cost of living crisis and soaring inflation. In short, the theory is that by increasing interest rates, people will be put off borrowing, and try to spend less and save more, bringing down inflation rates and getting the cost of living crisis under control.

But what’s making inflation go up? In short inflation generally increases when we have greater consumer demand. This tends to be fuelled by things such as rising energy prices, more jobs, rising wages, and higher household income.

What does this mean for me? Honestly, this depends on your individual situation. If you are trying to buy a property, or are about to renew your mortgage, please take a deep breath. Higher interest rates are going to mean higher mortgage rates and you will find yourself faced with much higher repayments.

In fact, this is expected to deal such a heavy blow to mortgages that the Government has promised that they will offer some support to homeowners who are struggling with mortgages as a result of the inflation increase.

If you’re paying off debt or credit card loans, you could also find yourself stuck with bigger repayments, as lenders will increase repayment rates on loans. Now might be a time to start quickly whittling down any debt.

What does it mean for my savings? Interest rate increases mean good news for savings. Higher BoE interest rates, also translate to higher rates of interest gathered on any cash you are putting into savings, so it might be an idea to start scanning the various savings accounts and getting yourself the best deal.

Will my pensions and investments be impacted? When it comes to pensions and investments, the impact of interest rates depends on how and where you have your money invested. A good chunk of pensions are generally invested in bonds (loans made to a government or company and paid back with interest) which will increase with interest rates, meaning more money into your pension. You could also see an increase in your pension if you are looking to invest in an annuity, which is a product that offers a guaranteed income once you retire.

For investment, again there isn’t a simple answer, as much will depend on where you have your investments stashed and how the market reacts.

Does that mean I should focus on savings rather than investing? While we should absolutely look to make the most of the higher savings rates, this doesn’t mean that we should completely stop thinking about investing. Of course it might be tempting knowing that the risk of capital loss is lower. However, you have to remember that you are investing for the long run. Yes interest rates are high right now, and are likely to get higher, but this won’t always be the case. Once we pass through the current stage of economic turmoil, interest rates will come down –  as will savings rates. However, if we have been investing (even a small amount) consistently, and looking at the long term, the investments will ultimately recover.

What should I do then? For your investments, take stock of what you have and where you are. However, rather than pulling out your cash, you should ultimately stick to the same investing rules – diversify, don’t put all your eggs in one basket, don’t invest more than you can afford to lose, and hold your nerve and focus on the long term.

For pensions, find out where and how your money is invested so you know where you stand. However, just like investing, its best that you leave your pension where it is.

If you have any outstanding loans and credit card balances, now is a good time to focus on paying them down sooner rather than later. If possible, try and avoid taking on any further debt as lenders could well choose to significantly raise repayment rates.

If you are struggling with debt or mortgages as a result of the interest rate hike, you should get in touch with your bank or lender and see what your options are and what support might be available.

This is likely not the end when it comes to rises – how can I prepare now for what’s further down the line? Summer is a time when many of us slow down. So while you may have some downtown, it’s a good idea to look over your finances and make sure that your ducks are in a row to deal with the aftermath of the current interest rate and what may come after.

Along with the points we mentioned earlier, it may be a good idea to start planning ahead and thinking of how you can stay on track with your financial goals.

For example, it may seem several months away, but maybe start saving some cash where you can so that you’re better placed to deal with the forthcoming autumn and winter including the general widespread spending that comes with the holiday season.