Understanding An Interest Rate Hike
In late 2015, the Federal Reserve voted to raise interest rates for the first time in almost a decade. Here we are halfway into 2016, and the Fed is thinking seriously about raising its benchmark interest rate again. So, what does all this mean, and how will it affect you? A lot depends on whether you are a saver, or whether you need to borrow. Here is what you need to know. This post will help you in understanding an interest rate hike.
If you are a saver, having interest rates rise after being low for so long will help your money grow. On the other hand, if you have credit card debt or if you need to borrow money, having interest rates rise can make things more difficult.
Here are some things to consider as consumers:
For Consumers
- Increase in price of new loans
- Increase in adjustable-rate mortgage payments
- Higher credit card interest payments
- Minimum payments on credit cards will increase
- More interest paid on savings accounts
Below is a nifty infographic that will help you understand interest rates and what you can do to prepare for the next rate hike.
See, understanding an interest rate hike is not so bad. This infographic was a fun and engaging way to learn something new. If you like this post, check out our other posts on our MoneySmart Tips Blog.
