Here’s what the Fed’s expected rate hike means for your wallet

The Federal Reserve is to raise rates Wednesday as they look to contain soaring inflation.

The first quarter-point increase in the federal funds rate in three years will likely lay the groundwork for additional hikes to follow.

“The cumulative effect of rate hikes is what is really going to have an impact on the economy and household budgets,” said Greg McBride, Bankrate.com’s chief financial analyst.

Typically, as borrowing costs rise, consumers will spend less, ultimately cooling the pressure on prices. But if you’re concerned about what this for your own credit card debt, auto loan, mortgage rate and student loan tab, .’s a breakdown of what may happen. 

Credit cards

Auto loans

Mortgages

Student loans

Savings

“Banks are very sluggish to raise rates,” said Yiming Ma, an assistant finance professor at Columbia University Business School.

Look for other options with better rates, McBride advised. “W. you have your money parked will make all the difference.”

Thanks, in part, to lower overhead expenses, the average online savings account rate, which is currently near 0.5%, is considerably higher than the average rate from a traditional, brick-and-mortar bank, according to Ken Tumin, the founder of DepositAccounts.com.

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