From the Chicago Tribune:
Americans are taking on more debt, and they’re soon going to be paying more for it.
The Federal Reserve on Wednesday raised its benchmark interest rate, citing an improving economy, low unemployment and rising wages. The move will affect millions of Americans by making it more expensive to borrow money, whether that’s in the form of credit card balances, car loans or some home mortgages.
This may mean the time is ripe to make a big purchase before interest rates go higher. The Fed already has promised two additional rate hikes this year and more in 2019 as its benchmark federal funds rate climbs from historic lows during the Great Recession.
But there’s also a silver lining for savers: Because interest rates have been low for years, it’s been tough to gain much extra ground in the form of interest when stashing away cash in savings accounts. The Fed’s move will make it easier to accrue interest on a nest egg or rainy day fund.
You’ll probably see the first sign of rising interest rates on your credit card bill within a few weeks, said Tendayi Kapfidze, chief economist for loan comparison site LendingTree. That’s because credit card companies generally offer variable interest rates that are adjusted in real time according to the prime rate, or the interest rate charged by most major banks to their corporate customers. The federal funds rate and the prime rate are tightly linked, and as one goes, so the other tends to go.
Home equity loans and auto loans with adjustable rates — most likely those made with a lender outside of the automaker — will begin to see higher rates next, Kapfidze said. Personal loan providers will soon catch up as well. That’s why this is a a critical time to shop around for the best interest rate on any debt you can, he said, especially with rates set to go even higher later this year.