What a Fed rate hike means for average consumers

You may receive more interest on bank deposits

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AP

By Web Desk

Published: Wed 16 Mar 2022, 11:25 PM

The Federal Reserve Wednesday raised its benchmark short-term interest rate by a quarter-point and signalled potentially up to seven rate hikes this year.

Raising the Fed rate means increasing the rates that banks charge one another for overnight loans. This, in turn will help curb inflation by making borrowing costs for consumers go up.

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Consumers will feel the sting of the increase in prices and interest rates soon.

In terms of credit card rates, consumers will eventually pay more on any revolving debt. Within one or two statement cycles, consumers will see a higher rate passed on to them.

As for interest on car loans - they are expected to rise, too. However, the interest rate a borrower will pay, relies on multiple other factors, primarily, such as, their credit history, the type of vehicle, the loan term and down payment.

In case you have money lying in a bank account, you may receive more interest on deposits. However, larger banks will raise rates only when they want to bring in more money, and most already have a good number of deposits.

The US economy's steady expansion will, however, help provide a cushion against the rising rates. There are still a near-record 11.3 million job openings, far outnumbering the number of unemployed.

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Web Desk

Published: Wed 16 Mar 2022, 11:25 PM

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