With the Federal Reserve enacting its second interest rate hike of 2022, you might be wondering what it means for your finances. In general, the Fed raising rates is a good thing as it seeks to tame the fastest rate of inflation in over 40 years. Stocks rose on the news, as investors viewed it as a positive for companies, and the economy.
However, for consumers, rising rates can impact debt levels and credit scores. For example, if you are carrying debt with variable interest rates, like credit card balances or a home loan, your monthly payments will likely go up as interest costs rise. Additionally, if you are planning to take out new debt, the terms may be more restrictive because of higher rates. Savers benefit from rising rates, as their savings accounts and CDs earn more interest.
Consumers also spend less when rates are high, which cuts demand and slows prices. The goal of the Fed is to reduce the upward pressure on prices and bring inflation back to 2%.
Pashun Starling, a mother of two from Bedford, was shopping for food at a Fort Worth grocery store Wednesday. She said she has been noticing higher prices at the stores recently and is trying to be more careful with her spending.
About the Author
