How the Fed’s Increase Interest Rate Can Affect You


As of December 14, 2016 the Fed raised its rate to a range between .5% and .75 percent at a very low level. The Fed’s gave little indication that the election of president- elect Trump altered its economic outlook.

“My colleagues and I are recognizing the considerable progress the economy as made,” said Janet L. Yellen. The central bank’s decision can affect the cost of housing, cars, student loans, mortgages, and even the interest on your credit card (not all right away). Economists talk alot about the influence of interest rates on us the consumer. For the longest time, the rate has been close to zero to bring the country out of a recession. Trump promisesed to increase economic growth measures like tax cuts and intrastructure, but if the economy continues to grow, expect interest rates to raise. The greater the stimuli, the faster interest rates are likely to rise.

Mortgages- Most home buyers opt for a 30- year, fixed rate mortgage. Long term mortgages regularly does not have a large impact, but if the Fed raises rates, banks will find ways to past higher borrowing rates to its loaners. Keep this in mind, as mortage rates go up, people are discourage to buy a house and are less likely to refinance.

Car loans- One time when I was driving around Atlanta, I saw a dealership was advertising its interest of 7.97%! Are you kidding? Who in the right mind would borrow at that rate? However, expect car loans to climb in response to recent news. It is predicted that interest rates will continue to climb in the next decade, so there is still time. If you’re thinking of buying anytime soon either now or in two years? Do it now.

Student loans- To all my peers and college students out there. This is for you! The pain is real. Federal loans are tied to 10- year Treasury rate, so start to think how you will be paying for college. Interest rates will be coming over the decade, so students or parents planning to take out a loan can expect student loan rates to rise. RIP to hopes and aspirations and hello higher student debt.


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