Here's how to get ahead of a rise in interest rates

The Federal Reserve is expected to raise rates by another three-quarters of a percentage point this week in order to keep the cost of living low.

Four times this year the U.S. central bank has raised interest rates.

According to Mark Hamrick, senior economic analyst at, the Fed has declared inflation as a public enemy.

He said that they want to take their benchmark rate into restrictive territory and hold it there for longer waiting for evidence that inflation is decreasing. We are far away from that location.

Personal Finance offers 5 ways to save amid record food price inflation.

The interest rate at which banks borrow and lend to one another is called the federal funds rate. The rates on private student loans and credit cards are affected by the Fed's moves.

Financing costs for many types of consumer loans will go up as a result of the upcoming rate hike.

Tomas Philipson is a professor of public policy studies at the University of Chicago and former acting chair of the White House Council of Economic Advisers.

A rate increase could affect your credit card, car loan, mortgage, student debt and savings deposits in a number of different ways.

1. Credit cards

Credit card rates follow the prime rate as the Fed's benchmark rate increases.

According to Ted Rossman, a senior industry analyst at, the average annual percentage rate is close to 18%.

A report states that half of credit card holders carry credit card debt from month to month.

It's easy to get into credit card debt. It's getting even harder because of high inflation and interest rates.

Consumers with credit card debt will spend an additional $5.3 billion on interest this year if the Fed hikes its rate by 75 basis points.

2. Mortgages

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. People shopping for a new home have lost purchasing power due to inflation and the Fed's policy moves.

According to the latest data from the Mortgage Bankers Association, the average interest rate on the 30-year fixed-rate mortgage doubled from a year ago.

Demand for mortgage loans has fallen since last year and fewer borrowers could benefit from a refinance.

Since the coming rate hike is baked into mortgage rates, homebuyers are going to pay $30,600 more in interest now, assuming a 30-year fixed-rate on an average home loan of $400,000.

3. Auto loans

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

Consumers with higher credit scores may be able to get better loan terms if the average interest rate on a new car loan is pushed up by the Fed.

Interest rates matter when it comes to auto purchases. They can make or break a deal, and rising interest rates could push consumers past their comfort zone for monthly payments.

Over the course of a $40,000 car loan, paying an annual percentage rate of 6% would cost consumers more in interest.

4. Student loans

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

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

Depending on your credit score, private student loan fixed rates can be as high as 13.95% and variable rates can be as low as 1.29%.

Anyone with education debt should check to see if they are eligible for student loan forgiveness.

5. Savings accounts

The interest rates on savings accounts are going up.

The savings account rates at some of the largest retail banks, which were near rock bottom since the start of the epidemic, are currently up to 0.13%, because of the Fed's influence on deposit rates.

To lower overhead expenses, top-yielding online savings account rates are as high as 2.5%, which is much higher than the average rate from a brick-and- mortar bank.

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.

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