WASHINGTON — This month, the Federal Reserve raised interest rates to fight inflation.
It got people talking online about what that really means for people. Where will interest rates hit them in the wallet?
QUESTION:
What are the three biggest ways interest rates affect Americans?
OUR SOURCES:
ANSWER:
Our experts said you’ll see the increases in loan costs, credit card debt, and your retirement.
WHAT WE FOUND:
To understand what is affected, you have to understand what interest rates are that went up.
“(This is the) rate at which the Federal Reserve loans the money to its member banks,” Bill Hoagland said.
The interest rate on your loans uses the reserve rate as a baseline, So when it goes up, all new loans go up.
“If (you) went a loan to get a car or if you want to get a mortgage-you’ll see it rise there,” Peter Ricchiuti said.
Th second effect is credit card debt can go up.
“Absolutely, now is the time to pay your cards off,” Hoagland said. “If you can do it.”
The third effect is in the stock market.
“There are certain kind of stocks that get clobbered when interest rates go up, and certain ones don't,” Ricchiuti said. “The ones that get clobbered are growth stocks.”
Our experts say you’ll see this in your 401k or retirement accounts.