CHICAGO (CBS) – The Federal Reserve raised interest rates on Wednesday for the first time since last year.
It is a good sign for the economy, but may be a bad sign for your budget. CBS 2’s Marissa Bailey explains.READ MORE: 2 People Killed In North Carolina Tubing Accident Were From LaPorte, Indiana
The Federal Open Market Committee decided Wednesday to raise the target range for the federal funds ranges by one-quarter percentage point; and with that, the federal interest rate went up to one-percent overall. It is a sign the economy is on the rebound.
“Some borrowers should be concerned and some borrowers do not have anything to worry about,” said Nirav Batavia is a money person with Forum Financial.
CBS 2 wanted to know how the interest rate hikes would affect interest rates on some common payments, so we took that question to Facebook.
Justin O’Malley from Bradley, Illinois wants to know if the interest rate hike on Wednesday will affect student loans.
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“It can and it most likely will for new borrowers,” Batavia said.
Suzy from Plainfield wants to know about her car loan.
“It really depends on whether she did a fixed or floating loan,” Batavia said. “Most car loans are fixed for four years.”READ MORE: Juneteenth Flag Flies Over Illinois State Capitol For First Time
And what about credit card payments?
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Batavia said if someone is carrying a $10,000 balance with a 15 percent interest rate, the increase will only be 0.25 percent.
That is about $2 a month.
And how soon could you see the increase in your payment?
“More than likely it will be reflected, if it is a variable rate loan, in the next monthly payment,” Batavia said.
What about mortgages?
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Batavia said if it is variable, chances are one will see the 0.25 percent increase reflected in your payment.MORE NEWS: At Least 2 Killed, 21 Wounded In Weekend Shootings In Chicago
That is the takeaway – figure out if you have fixed or variable interest rates on all payments to see if you will have an increase. This is good news for savers and people with money in the bank.