This is how a higher Fed rate could affect your finances

Credit card rates will likely rise. You'll pay more for an auto loan. The unusually large three-quarter point hike, Wednesday, June 15, 2022 in the Fed's benchmark short-term rate is going to have a lot of impacts on Americans' finances. The hope is that by making borrowing more expensive, the Fed will succeed in cooling demand for homes, cars and other goods and services and slow inflation. – Record-low mortgages are long gone. Credit card rates will likely rise.

When asked if he felt we were moving toward a recession, Missa said, “My personal view now is: Most likely. Yes.” He believes rates should have been raised in 2021.How will a higher Fed rate affect your finances? These are some of the most common questions being asked about the impacts of the rate hike.Rates on home loans have soared in the past few months, mostly in anticipation of the Fed’s moves, and will probably keep rising.

Economists say that higher mortgage rates will discourage some would-be purchasers. And average home prices, which have been soaring at about a 20% annual rate, could at least rise at a slower pace. The Fed's rate increases have already sent credit card borrowing rates above 20% for the first time in at least four years, according to LendingTree, which has tracked the data since 2018.You may earn a bit more, though not likely by very much. And it depends on where your savings, if you have any, are parked.Savings, certificates of deposit and money market accounts don’t typically track the Fed’s changes.

While bitcoin prices were mostly unchanged after the Fed’s announcement, crypto prices had declined in the days leading up to the central bank’s move. They dropped by a third in seven days.Higher interest rates mean that safe assets like bonds and Treasuries become more attractive to investors because their yields are now higher. That, in turn, makes risky assets like technology stocks and cryptocurrencies less attractive.

Source: Loan Digest (loandigest.net)

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