After holding rates near rock bottom for two years, the Fed is finally boosting its benchmark. Here's what that means for you.
The first increase in the benchmark rate"The war in Eastern Europe gives the Fed reason to act more cautiously, but they will still be working to corral what is already the highest inflation in 40 years," said Greg McBride, chief financial analyst at Bankrate.com.The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight.
"The cumulative effect of rate hikes is what is really going to have an impact on the economy and household budgets."are already edging higher, since they are influenced by the economy and inflation. A $300,000, 30-year, fixed-rate mortgage would cost you about $1,432 a month at a 4% rate. If you paid 4.5% instead, then the same loan would cost $131 a month more or another $1,572 each year, and $47,160 over the loan's lifetime., which are pegged to the prime rate, will be more directly affected. Most ARMs adjust once a year, while a home equity line of credit, or HELOC, adjusts immediately.
"A single quarter-point rate increase isn't likely to flip cardholders' financial world upside down. However, all rate hikes, even small ones, are unwelcome news for folks with credit card debt," said Matt Schulz, chief credit analyst for LendingTree.
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