How to Pay Off Your Debts Before Six Interest-Rate Increases

Fed rate increases don’t immediately raise the interest you pay on loans, but they do affect it indirectly. Financial advisers say you should pay down your high-interest debt as quickly as possible, given the Fed’s stance. It will cost you if you don’t. 

Here are some tips on how to tackle it.

Create a sense of urgency

You can use the prospect of additional interest-rate increases to create a sense of urgency to pay off your debt. Karol Ward, a psychotherapist and confidence coach in New York, suggests visualizing what it would feel like to have to pay more and more interest. Then picture the relief of having your debt eliminated faster.  

“You’ll recognize quickly by either feeling energized or discouraged which decision is best for you,” she said.

Resolving debt faster means you will likely have to cut back on some extras in your life now. While that might not feel good in the short term, Ms. Ward suggests focusing on the eventual gratification you will feel when you are relieved of that debt.

“Connect to the pride of both the effort and steps you are taking to become free of that debt,” said Ms. Ward. 

Get motivated 

Reframe paying off the interest of your debts as a return, which can motivate you to pay off the debt with the highest interest rate first, said

Michael Liersch,

head of advice and planning at Wells Fargo. Count how much money you will get back over the lifetime of the debt you are paying off, he said.

The Fed’s quarter-percentage-point increase won’t be a big deal for most credit-card borrowers, said

Ted Rossman,

senior industry analyst at Bankrate. It will add only about $1 a month to the minimum payments toward the average credit-card debt of roughly $5,500 at the average credit-card rate of about 16.34%, he said. 

Still, if you only make minimum payments, you will end up paying more than $6,000 in interest and it will take you more than 16 years to pay off the debt. The amount you will owe and time it will take to repay it will increase as the Fed raises rates.

Know your debts

Once you have your timeline, list each of your debts along with its corresponding interest rate, said

Manu Lakkur,

director of product at Credit Karma. Creating a spreadsheet or tracking what you owe in an app can help you feel more in control, he said. 

Pay special attention to credit-card debt, adjustable-rate mortgages, home-equity lines of credit, auto loans and private student loans, as the interest rates on these loans may rise faster than those on other types of loans.

Make a plan

Financial planners generally recommend paying off expensive debt first before tackling lower-rate balances.

The interest on your debt may compound faster than the growth you may expect from your investments over the same period of time, said

Kyle McBrien,

financial planner at digital investment adviser Betterment.

Consider your minimum debt payments as fixed expenses, said Mr. McBrien. Then, get aggressive about paying off the highest-interest loan first, then moving on to the next to minimize total interest paid over time.

Consider a “scorched-earth” strategy by spending as little as possible and selling any assets you don’t need right now—such as collectibles—to help you get out of debt faster, said

Benjamin Rickey,

a financial planner in Yakima, Wash. 

“It will be painful,” said Mr. Rickey.

Refinance your debt

If you have loans with a variable interest rate, consider refinancing to lock in a fixed rate. This will give you a dependable monthly payment that won’t rise further if interest rates continue to go up.

The decision to refinance depends largely on your financial situation and what your goal is, said Mr. Lakkur at Credit Karma: to save money over the life of your loan or to be able to lower your monthly payments to free up some extra cash.

If you have a large amount of pricey credit-card debt or are juggling several credit-card payments, consider consolidating with a personal loan, which tends to come at lower interest rates, especially if your credit is good.

Sign up for a 0% balance transfer credit card, said Mr. Rossman at Bankrate. You may be able to avoid interest for up to around 21 months and could save hundreds in interest payments depending on how much you owe, he said. Most offers charge a transfer fee of 3% to 5%, but it can be worth the cost as long as you are disciplined about paying the money back during the 0% offer period, said Mr. Rossman.

Write to Veronica Dagher at Veronica.Dagher@wsj.com