No
one likes hearing about federal rate hikes, but, unfortunately, the Federal
Reserve did recently raise its interest rate. This means that if you, like most
Americans, have a credit card, are in the market for buying a car or a house,
or invest and/or save regularly, you could be affected.
While
the rate hike does mean that our economy is improving, the effects a rate hike
could have on you, personally, may not be good. That’s why you should be aware
of the possible personal implications of a rate hike. That way, you can
adequately brace and prepare for them.
Mortgage
Rates Could Rise
If
you’re in the market for a home, you may find that your proposed interest rate
is higher than expected. While this is not always the case with rate hikes, the
fact that the current rate hike came at about the same time as rising interest
on a 10 year treasury bond, to which mortgage rates are related, does mean that
mortgage rates are likely to go up.
With
that said, though, mortgage rates are still relatively low compared to recent
years, so even though you may “take a hit” on your mortgage rate, it shouldn’t
be too bad of a hit.
Rising
Inflation
The
newly elected president is planning to dish out major money on US infrastructure,
including roads, tunnels, and more. The increased spending that he is planning
is likely to drive up demand for goods and thus increase and build up
inflation. This, in turn, could lead to higher interest rates on credit card
payments and many types of loans, which is definitely something to be aware of.
The
bottom line is that, whether these scenarios apply to you or not, you may be
affected, in ways you don’t even realize, by the rate hike, so it’s important
to talk with your financial adviser about what kinds of things you can expect
to see as a result of the rate hike.
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