As expected, the US Federal Reserve on Wednesday hiked its key short-term interest rate for the first time since 2018.

While the US economy is still operating in a fairly low rate environment, that won’t last long. The central bank is expected to raise rates several more times in the months ahead, though it’s not clear by how much.

“Inflation is the hub on the wheel and will dictate just how much and how often the Fed will need to raise interest rates,” said Greg McBride, chief financial analyst at Bankrate.com.

Federal Reserve Chairman Jerome Powell suggested in a press conference that he expects there will be additional half-percentage-point rate hikes for at least the next few meetings.

Hiking rates to tame inflation will make borrowing more expensive, and it also has the potential to cause a recession. But there are a few ways to situate your money so that you can benefit from a rising rate environment, while also protecting yourself from its downside.

Credit cards: Minimize the bite

When the fed funds rate – also known as the overnight bank lending rate – goes up, it will push up various lending rates that banks offer their customers. So you can expect to see a hike in your credit card rates within a few statements, McBride said.

If you’re carrying balances on your credit cards – which typically have high variable interest rates – consider transferring them to a zero-rate balance transfer card that locks in a zero rate for between 12 and 21 months.

“That insulates you from rate hikes over the next year and a half, and it gives you a clear runway to pay off your debt once and for all,” McBride said.

If you don’t transfer to a zero-rate balance card, another option might be to get a relatively low fixed-rate personal loan.

In any case, the best advice is to make every effort to pay down your balances quickly.

Home loans: Lock in fixed rates now

Mortgage rates have been rising over the past year. And that is likely to continue.

“Mortgage rates have jumped two full percentage points since the beginning of the year, from 3.27% to 5.28%,” McBride noted.

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If you’re close to buying a home or refinancing one, lock in the lowest fixed rate available to you as soon as possible.

That said, “don’t jump into a large purchase that isn’t right for you just because interest rates might go up. Rushing into the purchase of a big-ticket item like a house or car that doesn’t fit in your budget is a recipe for trouble, regardless of what interest rates do in the future,” said Texas-based certified financial planner Lacy Rogers.

If you already have a variable rate home equity line of credit, and you used part of it to do a home improvement project, McBride recommends asking your lender if they would be willing to fix the rate on your outstanding balance, effectively creating a fixed-rate home equity loan. Say you have a $50,000 line of credit but only used $20,000 for a renovation, you would ask to have a fixed rate applied to the $20,000.

If that’s not possible, consider paying off that balance by taking out a HELOC with another lender at a lower promotional rate, McBride suggested.

Bank savings: Shop around

If you’ve been stashing cash at big banks that have been paying next to nothing in interest for savings accounts, don’t expect that to change just because the Fed is raising rates, McBride said. That’s because the big banks are swimming in deposits and don’t need to worry about attracting new customers.

But online banks, which are looking to keep current accounts and attract more business, are likely to offer far better rates. So it’s worth shopping around.

Stocks: Consider pricing power

When deciding whether a company or sector might do well in a rising rate environment – especially one marked by inflation that is being driven by a strong economy, as well as disruptions in the supply chain and rising commodity prices, consider, “what companies will have pricing power in an inflationary environment?” said Michael Stritch, chief investment officer at BMO Wealth Management.

Financial service businesses, such as banks, typically do well in rising rate environments because, among other things, they make more money on loans. Insurers can prosper, too, partly because the yields on the securities they hold in their portfolio go up.

Normally, real estate can be hurt by rising rates, in part because they can dampen demand. But since the 10-year Treasury yield, which drives mortgage rates, has already risen strongly in the past year, it may not jump sharply from where it is, Stritch said.

Given that there also may be a period of sustained inflation this year, some exposure to real estate via Real Estate Investment Trusts may offer good income potential if the underlying investments boost revenue through rising rents, hotel rates and the like.

Technology companies also don’t usually benefit from higher rates. But considering cloud and software service providers issue subscription pricing to clients, those may rise with inflation, said certified financial planner Doug Flynn, co-founder of Flynn Zito Capital Management.

Bonds: Go short

To the extent you already own bonds, the prices on your bonds will fall in a rising rate environment. But if you’re in the market to buy bonds you will benefit from that trend, especially if they are short-term bonds, since prices have fallen more than usual relative to long-term bonds. Normally, they move lower in tandem.

“There’s a pretty good opportunity in short-term bonds, which are severely dislocated,” Flynn said.

Given today’s high rates of inflation, Series I Savings Bonds may be attractive because they’re designed to preserve the buying power of your money. They’re currently paying 7.12%. But that rate will only be in effect for six months and only if you buy an I-Bond by the end of April, after which the rate is scheduled to adjust. If inflation falls, the rate on the I-Bond will fall, too.

There are some limitations. You can only invest $10,000 a year. You can’t redeem it in the first year. And if you cash out between years two and five, you will forfeit the previous three months of interest.

“In other words, I-Bonds are not a replacement for your savings account,” McBride said.

Nevertheless, they preserve the buying power of your $10,000 if you don’t need to touch it for at least five years, and that’s not nothing. They also may be of particular benefit to people planning to retire in the next 5 to 10 years since they will serve as a safe annual investment they can tap if needed in their first few years of retirement.

Other assets that may do well are so-called floating rate instruments from companies that need to raise cash, Flynn said. The floating rate is often benchmarked against the fed funds rate, so it will go up whenever the Fed hikes rates.

But if you’re not a bond expert, you’d be better off investing in a fund that specializes in making the most of a rising rate environment through floating rate instruments and other bond income strategies. Flynn recommends looking for a strategic income or flexible income mutual fund, which will hold an array of different types of bonds.

“I don’t see a lot of these choices in 401(k)s,” he said. But you can always ask your 401(k) provider to include the option in your employer’s plan.