With the Bank of England now announcing the biggest-ever hike in interest rates in over three decades, many are wondering how this will affect them and their finances.

This announcement comes amid the cost of living crisis which is causing many households to struggle with high inflation and the rise in the cost of fuel.

The Bank of England, the country's central bank, announced measures to alleviate UK inflation by increasing interest rates for credit card debt, mortgages, and more.

So, what does this mean for the average person in the UK?

How will interest rates affect my mortgage?

The Bank of England announcement will see the money paid back to the bank from your mortgage payments increase.

Interest rates will rise to 3%, the highest since Black Wednesday in 1992. This would increase the money being paid back by homeowners with a mortgage.

Repayments for the average UK mortgage holder are set to rise by £52 per month.

However, those with a fixed rate agreement will pay the same throughout the length of their deal regardless of what happens to interest rates.

How will interest rates affect my credit card debt?

Much like mortgages, the repayments for credit cards will increase due to the interest on this debt rising as well.

This means credit card users can expect to pay more every month on their repayments.

To find out more and how best to pay this credit card debt off, please read: Bank of England Interest Rates: Will inflation affect credit card debt?

How will interest rates affect my savings accounts?

A rate rise could potentially lead to higher interest on savings accounts but this rise would be far below inflation (which stands at 10.1%), meaning bank account holders would still be netting a loss.

Many experts recommend paying off high-interest debt as interest rates for borrowing are higher compared to savings deals.

Some are also recommending that those with a mortgage could use any lump sum cash to make a mortgage overpayment, potentially saving money from interest in the long run.