Another major interest rate hike is coming from the Federal Reserve: Here are 5 ways it could affect you

Consumers are spending more and saving less in order to keep up with the cost of living.

The Fed is expected to raise rates by three-quarters of a percentage point next week.

Fed officials have already raised benchmark short-term borrowing rates 1.5 percentage points this year, including June's 75 basis point increase, which was the largest increase in nearly thirty years.

The withdrawal strategy can help retirees stretch their savings.

The U.S. central bank has indicated that there will be more increases in the future.

"With the hot month-over-month and year-over-year numbers coming in as they have, this tells the Federal Reserve it has more work to do with higher interest rates to eventually achieve its mandate of stable prices."

If the Fed raises rates, financing costs for many types of consumer loans will go up, but short-term borrowing rates will be the first to rise.

Bankrate's chief financial analyst said that variable rate debt tends to follow Fed moves.

Here is a breakdown of what that means for your finances.

1. Credit cards

Credit card rates follow the prime rate as the federal funds rate increases.

According to Ted Rossman, a senior industry analyst at CreditCards.com, an all-time record could be set by the end of the year.

Anyone carrying a balance on their credit card will have to pay more to cover the interest charges.

• If the Fed announces a 75-basis point hike in July, as expected, consumers with credit card debt will spend an additional $4.8 billion on interest this year alone, according to a new analysis by WalletHub. A 100-basis point increase will cost credit card users an extra $6.4 billion this year.
• Factoring in the rate hikes from March, May, June and July, credit card users will wind up paying around $12.9 billion to $14.5 billion more in 2022 than they would have otherwise, WalletHub found.

2. Adjustable-rate mortgages

Home equity lines of credit and mortgage rates are pegged to the prime rate

Homeowners won't be impacted by a rate hike immediately because 15-year and 30-year mortgage rates are fixed. Anyone shopping for a new house is already going to pay more for their next home loan than anyone else.

• Since the coming rate hike is largely baked into mortgage rates, homebuyers are going to pay roughly $29,160 to $39,240 more in interest now, assuming a 30-year fixed-rate on an average home loan of $405,200, according to WalletHub’s analysis.

3. Car loans

The Fed's move could push up the average interest rate on a new car loan past 5% for people planning on buying a new car in the next few months.

• Paying an APR of 5% instead of 4% would cost consumers $1,324 more in interest over the course of a $40,000, 72-month car loan, according to data from Edmunds.

4. Student loans

The interest rate on federal student loans is going to go up in the next two years. Congress sets the student loan rate in May based on the 10-year Treasury rate. The rate will go into effect in July.

As the Fed raises rates, private student loan borrowers will pay more in interest. The benchmark will determine how much more will be.

5. Savings accounts

The interest rates on savings accounts are going up.

Nela Richardson, chief economist at payroll processor Automatic Data Processing, said that people are going to need this cushion as prices continue to increase.

The time is right for households to prepare. One of the best ways to maximize that savings is.

• Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are now as high as 1.75% to 2%, much higher than the average rate from a traditional, brick-and-mortar bank.

Money that earns less than the rate of inflation loses purchasing power.

When inflation is at 9%, earning 2% isn't important.

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