Fed rate hike likely means more expensive credit cards and mortgages, but savers may rejoice
The quarter-point increase is expected to lift credit card, auto and mortgage borrowing costs while improving returns on savings accounts, analysts said.
- On Wednesday, the Federal Open Market Committee, led by Chairman Kevin Warsh, raised the federal funds rate by one quarter percentage point to a target range of 3.75% to 4.0%.
- Inflation concerns prompted the central bank's action, as consumer prices have remained above the Fed's 2% target for more than five years. The Labor Department reported Friday that prices rose 3.4% in August.
- Borrowing costs for homes and autos will rise as prime rates adjust. LendingTree analyst Matt Schulz noted that while a single increase seems small, "stacking a few these on top of each other over time" adds up to something bigger.
- Auto loan rates are near multi-year highs, with new-vehicle transaction prices averaging around $50,000 according to Kelley Blue Book. A quarter-point mortgage rate increase could raise monthly payments by approximately $65 for a borrower financing the average $389,367 home loan.
- While borrowers face strain, savers can expect better returns on high-yield accounts. LendingTree's Schulz said, "It's a great time to shop for an online high-yield savings account," as returns improve in the near future.
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The Fed just raised rates. Here’s what it means for borrowers and savers
By Jeanne Sahadi, CNN (CNN) — For the first time in more than three years, members of the Federal Open Market Committee unanimously decided to hike the Fed’s key overnight bank lending rate by a quarter point in a bid to reduce inflation, which remains well above the central bank’s 2% target. And 16 of
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BizTocWhat the Fed rate hike likely means for you
Bad news for borrowers, good news for savers.
Fed Reverses Course With First Interest Rate Hike In 3 Years - American Liberty News
The Federal Reserve unanimously raised interest rates Wednesday for the first time in more than three years, reversing course as stubborn inflation and soaring energy costs force policymakers back into inflation-fighting mode. The era of falling interest rates has hit a major roadblock. The Federal Reserve voted unanimously Wednesday to raise its benchmark interest rate […] The post Fed Reverses Course With First Interest Rate Hike In 3 Years ap…
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