The Federal Reserve’s recent interest rate hike has sparked a lot of conversations about how it will affect regular folks. The move, which raised interest rates by three-quarters of a percentage point, was intended to curb record inflation. Here are some things you should know about how the rate hike will impact regular folks:
Access to Credit: When interest rates increase, it affects the ways that consumers and businesses can access credit. This means that regular folks might find it more difficult to take out loans or use their credit cards. However, it’s worth noting that the impact of the rate hike on credit access will depend on the specific type of loan or credit product.
Savings: One of the advantages of an interest rate hike is that it often means that savings rates increase. Regular folks who have money in savings accounts or CDs might find that their interest earnings go up as a result of the rate hike. This can be useful for those who are trying to save up for emergencies, vacations or other financial goals.
Mortgages: If you’re in the market to buy a home, the rate hike might mean that mortgage rates are more expensive. This can make it more challenging for regular folks to afford a home or might impact home affordability. However, if you already have a fixed-rate mortgage, you won’t be affected by the rate hike until it’s time to refinance.
Investments: For regular folks who have investments, the interest rate hike can impact their portfolio. Stocks might become more volatile, which could lead to losses in the short-term. However, some investors might see a benefit if they have investments in sectors that benefit from rising interest rates.
Overall, the Federal Reserve’s interest rate hike will have a mixed impact on regular folks. Those who are looking to borrow money might find it more challenging, while savers might benefit from higher interest rates. Homebuyers might find that mortgages are more expensive, and investors should be ready for some volatility. However, the exact impact will depend on individual circumstances, and folks should consult with a financial advisor to determine how the interest rate hike will affect their unique financial situations.