Here's what the Fed's planned rate hike means for your wallet
Here’s what the Fed’s planned rate hike means for your wallet

The Federal Reserve is expected to raise rates on Wednesday as it seeks to contain soaring inflation.

The first quarter-point increase in the fed funds rate in three years likely lay the groundwork for additional hikes to follow.

“The cumulative effect of rate hikes is what’s really going to impact the economy and household budgets,” said Greg McBride, chief financial analyst at Bankrate.com.

Typically, as borrowing costs rise, consumers spend less, which eventually eases price pressure. But if you’re worried about what that means for your own credit card debt, car loan, mortgage rate, and student loan, here’s a breakdown of what can happen.

Credit card

Car loans

Mortgages

Student loans

Savings

“Banks are very slow to raise rates,” said Yiming Ma, an assistant professor of finance at Columbia University Business School.

Look for other options with better rates, advised McBride. “Where you put your money will make all the difference.”

Thanks in part to lower overhead costs, the average rate for online savings accounts, which is currently close to 0.5%, is considerably higher than the average rate at a traditional bank, according to Ken Tumin , the founder of DepositAccounts.com.

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