Interest rates expected to rise again: how to prepare

The Federal Reserve Board kicked off its two-day meeting on January 31st. The increase is expected to be 0.25%, or 25 basis points, according to Reuters. This is smaller than the increase the consumer experienced in his 2022. However, an increase of any size can impact household budgets. Here are some of the ways this announcement could affect saving and borrowing.

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savings account

One of the few positive consequences of rising interest rates is that even high-yielding savings accounts have started to rise. It probably won’t offset the impact of inflation, stagnant wages and rising interest rates, but it will bring in additional earnings. Therefore, when interest rates rise, it may be wise to plan to deposit additional cash into a high-yield savings account to prepare for the next interest rate rise.

credit card

Credit cards usually have an annual variable rate (APR). This means that there is a range of possible rates. As such, credit card interest rates may rise as a result of an announcement from the Federal Reserve. It usually takes 1-2 billing cycles for the price to change, so consumers may not see the impact immediately. With interest rates likely to rise again, outstanding credit card debt should be settled as soon as possible. Credit cards tend to have the highest interest rates of all loan types, so this is generally sound advice regardless of the economic climate.

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auto loan

Auto loans are usually fixed rate. This means that the rate hike won’t affect current car loans, but it could affect interest rates on future loans. But auto loans are largely based on an individual’s credit history and score, so consumers may be able to get better rates by focusing on these factors. It is wise to finalize the car loan you need before. He is expected to raise rates by 25 basis points for the second time in March when the Fed meets again.

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This article originally appeared on GOBankingRates.com: Interest Rates Expected to Rise Again: How to Prepare