The federal funds rate is set by the US central bank. Borrowing and saving rates are affected by the Fed's moves, even though consumers don't pay that rate.
The rate hike will correspond with a rise in the prime rate and cause financing costs to go up for many types of consumer borrowing.
Savers will earn more money on their deposits if the interest rate is raised.
Long-term borrowing rates will be the first to go up.
Variable rate debts such as credit cards and home equity lines of credit will be the biggest exposure with the Federal Reserve raising interest rates.
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 high annual percentage rates could be reached by the end of the year.
Anyone carrying a balance on their credit card will have to pay more in interest just to cover it.
Consumers with credit card debt will spend an additional $4.8 billion on interest this year as a result of the rate hike. Credit card users will pay more in the future because of the rate hikes from March, May, June and July.
When rates rise, the best thing you can do is pay down debt.
Call your card issuer to ask for a lower rate, consolidate and pay off high-interest credit cards with a lower interest home equity loan, or switch to an interest-free balance transfer credit card if you have a balance.
Credit card debt can be a problem for people, and zero-percent balance transfer offers can be a solution.
Home equity lines of credit are pegged to the prime rate, but 15-year and 30-year mortgage rates are fixed and linked to the economy. Rates almost doubled since the start of the year, so anyone shopping for a home has lost a lot of purchasing power.
A 30-year, fixed-rate mortgage at December's rate of 3.11% would have meant a monthly payment of about $1,283. The monthly payment is $1,711. Jacob Channel, the senior economist at LendingTree, said that an extra $428 a month or $5,136 more a year would be added to the loan.
Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans, so if you are planning to buy a car, you'll shell out more in the months ahead
Over the course of a $40,000, 72 month car loan, the rate of interest would go up by more than $1,000 if consumers paid anAPR of 5% instead of 4%.
Most borrowers will not be impacted by a rate hike immediately. If you are going to borrow money for college, the interest rate on federal student loans is going to go up in the next few years.
As the Fed raises rates, borrowers will pay more in interest, although how much more will vary by the benchmark, if they have a private loan.
After a number of rate hikes, the interest rates on savings accounts are finally going up.
The savings account rates at some of the largest retail banks are currently up to 0.10% because of the changes in the target federal funds rate.
Thanks to lower overhead expenses, top-yielding online savings account rates are higher than the average rate from a brick and mortar bank.
Inflation must come down in a substantial way for those higher savings returns to truly shine.
The yields will continue to increase as the central bank hikes its rates. Money that earns less than the rate of inflation loses purchasing power.
Savers are seeing better returns on savings accounts, money markets and certificates of deposit. Higher savings returns must come down in a big way in order for them to shine.
The interest rates are going to go up in the coming months.
Inflation is running north of 9% even though the Fed funds rate is back to where it was in July. There will be more interest rate increases coming in the months ahead.
The Fed is expected to raise rates again in September and then again in November and December before possibly cutting rates in the spring depending on the economy.
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