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5 ways higher interest rates might affect you
When the Federal Reserve raises its target interest rate, the change affects consumers, too. The Federal rate helps determine the interest that you pay for loans and earn on savings, so it matters for just about everyone. Here’s what might change when rates rise.
If you have a fixed-rate mortgage, you don’t need to worry about the change. But if you have an adjustable rate mortgage, your rate will likely increase and you’ll pay more as a result. Check with your lender to find out how much your payment will increase, and if it benefits you to refinance into a fixed-rate loan. If you’re shopping for a mortgage, you may notice that rates are higher than they were a few weeks earlier.
The good news is interest rates on federal student loans are fixed, so those loans remain locked into their current rates. If you have private loans, however, your payments could increase. Check with your lender.
A target rate increase isn’t all bad news: One positive effect may be higher interest rates for CDs, money market and basic savings accounts. Although higher rates are good news for savers, don’t expect an immediate, dramatic change; rates tend to move gradually.
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