This week, the Federal Reserve will likely raise rates by another three-quarters of a percentage point for the third consecutive time in an effort to cool down the high cost of living.
The U.S. central bank has already raised interest rates four times this year, for a total of 2.25 percentage points.
“They want to take their benchmark rate into restrictive territory and hold it there for longer awaiting what Chairman Jerome Powell has said must be ‘compelling evidence that inflation is moving down,’” he said. “We remain far from that destination.”
The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the rates consumers see every day on things such as private student loans and credit cards.
The upcoming rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many types of consumer loans.
What a rate hike could mean for you
Here’s a breakdown of some of the major ways a rate increase could impact you, in terms of how it may affect your credit card, car loan, mortgage, student debt and savings deposits.
This article originally appeared here and was republished with permission.