Money Matters: Federal Reserve rate hike impact

The Federal Reserve raised interest rates last week for the first time since 2023, a move aimed at fighting inflation. Financial expert Barry Bigelow says the impact will depend on whether you’re borrowing money or saving it.

“It makes getting a loan and making that loan profitable more difficult,” Bigelow said. “The reward for saving is going up.”

According to Bigelow, people carrying credit card balances may feel the effects first because credit card rates are closely tied to the Fed’s rate decisions.

“If you’re carrying a credit card balance, it is going to be more expensive for you to carry that balance than it was before last Wednesday,” he said.

Homeowners with fixed rate mortgages likely will not see any change, but those with variable rate mortgages or home equity lines of credit could face higher costs. Prospective homebuyers may also see borrowing become more expensive.

While the news may be challenging for borrowers, Bigelow says savers could benefit. Banks may begin offering higher interest rates on savings products, including certificates of deposit.

“For those that are local CD shoppers, it’s going to be an early Christmas,” Bigelow said.

His top advice? Focus on paying down credit card debt and shop around for higher yielding savings options if you have money you do not need right away.

“Those who are carrying a credit card balance, it’s time to attack that and get it paid down because you’re just going to lose more money the longer it sits there,” Bigelow said.