Here Are 5 Things That The FED Rate Hike Of 0.75% Will Affect

To combat untamed inflation, the Federal Reserve raised its key interest rate by another 0.75% on Wednesday — further increasing how much consumers will pay on debt like credit cards, mortgages and other loans.

The federal funds rate, which indirectly determines the cost of loans, has increased from near-zero to a range of 2.25% to 2.5%. This is the fourth rate hike in five months.

Here’s a look five things that will become more expensive:

A 2.25% year-to-date rate increase means that for a cardholder making the minimum payment on a $5,000 credit card balance, it will take an additional five months and $868 in interest to pay the card off completely, according to calculations provided by Bankrate.com.



2. Car loans
Auto loan lenders use the Fed’s benchmark rate to determine the interest rate you’ll pay on financing. This won’t affect borrowers already locked into fixed-rate financing, but new car loans or those with variable-rate financing will likely go up in cost.    

Borrowers with ARMs can expect a bump in the interest rate on their home loans, although it will vary based on the lender, the mortgage size and their credit score. That said, the average interest rate for five-year ARMs have nearly doubled since the beginning of the year, which coincides with four Fed rate hikes in that time.

However, borrowers with private, variable-rate student loans could see an increase in how much they pay in interest charges, usually within a month of the rate hike. This would also apply to new borrowers signing up for private, fixed-term student loans after the rate hike kicks in. The rates for these types of loans tend to rise with the federal funds rate — though technically, they aren’t directly linked.

Interest rates and terms on private student loans can vary depending on your financial situation, credit history and the lender you choose.