Connect with us

Another

What Another Fed Rate Hike Means For Your Wallet

Published

on

What Another Fed Rate Hike Means For Your Wallet

Getty Images

You could have read this in your inbox.

Sign up for our free weekly newsletter. No spam, just good advice.

  • A valid email address is required.
  • You must check the box to agree to the terms and conditions.

Thanks for signing up!

We’ll see you in your inbox soon.

Advertisement

I would like to subscribe to the NextAdvisor newsletter. See privacy policy

We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

I didn’t really understand the importance of the Federal Reserve and how its decisions affect everyday consumers until I was in my mid-20s. 

Advertisement

This is Alex Gailey with NextAdvisor — and sure, many of us are taught about government systems and the role of the Fed in high school. But no one connected the dots for me on how the Fed’s decisions affect Americans’ bottom line and purchasing power. 

(This article was originally published in NextWeekly, my weekly newsletter packed with news, trends, and ideas on money. Sign up for it using the box below.)

Learn all about money in next to no time with my weekly newsletter.

In your inbox every Tuesday

The Fed keeps an eye on several economic indicators, such as unemployment, consumer prices, and GDP. If anything is out of balance, the Fed steps in to try and get things back on track with monetary policy. 

Advertisement

And that’s essentially what happened this year because of inflation. Consumer prices saw the largest increase in 40 years, so the Fed stepped in to try to tame inflation by hiking interest rates at a rapid pace. The hikes so far have not curbed skyrocketing prices as quickly as the Fed would like (inflation reached 8.3% in August), and the Fed announced another 75 basis point interest rate hike on Wednesday. Many experts say more rate hikes are on the way.

Higher interest rates make debt costlier and borrowing harder — for both consumers and businesses. That could have the effect of slowing down demand, and less demand means less money circulating in the economy, leading employers to reduce their expenses and cut jobs. In short: the Fed might slow things down too much, and that could have consequences. Most Americans worry the United States will fall into a recession later this year. 

While you can’t control what the Fed does, you can make your own money moves in response. 

An increase in the bank’s benchmark federal funds rate is painful for consumers — it means higher rates for credit cards, mortgages, auto loans, and any industry that relies on financing. With interest rates rising, you’ll want to try to borrow less, save more, and work on paying off any debt (especially credit card debt, which comes with double-digit interest rates) as fast as you can. 

On the flip side, it’s a good time to save money — especially if you’re keeping it in the right place. Interest rates on savings and CD accounts are higher now because of the Fed’s rate hikes, which means greater earnings on your savings balances and a few more dollars back into your pocket. 

Advertisement

Also, hold onto your long-term investments. Investors tend to panic when the Fed takes action, and that translates to more volatility in the markets. It’ll likely be a bumpy ride over the next few weeks, but experts say you should avoid selling and ride out the dips instead. 

The Bottom Line

The Fed’s decision to raise interest rates this week affects your money, but it shouldn’t completely steer your long-term financial plan off course. Keep an eye on what the Fed’s doing and make small changes if needed to get closer to reaching your financial goals.

Continue Reading
Advertisement
Click to comment

Top posts

Sleuth Discovers Satoshi’s Long-Lost Bitcoin Version 0.1 Codebase, Raw Code Contains Bitcoin Inventor’s Never-Before-Seen Personal Notations Sleuth Discovers Satoshi’s Long-Lost Bitcoin Version 0.1 Codebase, Raw Code Contains Bitcoin Inventor’s Never-Before-Seen Personal Notations
1 million BTC4 hours ago

Sleuth Discovers Satoshi’s Long-Lost Bitcoin Version 0.1 Codebase, Raw Code Contains Bitcoin Inventor’s Never-Before-Seen Personal Notations

On October 7, 2022, a bitcoin supporter named Jim Blasko explained that he discovered the oldest upload of Bitcoin’s version...

Bankruptcy Court Publishes 14,000 Pages Of Celsius Customer Usernames And Trade History Bankruptcy Court Publishes 14,000 Pages Of Celsius Customer Usernames And Trade History
Alex Mashinsky9 hours ago

Bankruptcy Court Publishes 14,000 Pages Of Celsius Customer Usernames And Trade History

The crypto community is upset about a recent discovery stemming from the Celsius bankruptcy case as a court filing has...

Chiliz [CHZ] on-chain metrics to consider before going long this week Chiliz [CHZ] on-chain metrics to consider before going long this week
Altcoins10 hours ago

Chiliz [CHZ] on-chain metrics to consider before going long this week

CHZ is among the cryptocurrencies that have delivered the most gains recovering from June lows. It just concluded a 25%...

EU Bans Crypto Services For Russians In New Sanctions Over Ukraine Escalation EU Bans Crypto Services For Russians In New Sanctions Over Ukraine Escalation
annexation11 hours ago

EU Bans Crypto Services For Russians In New Sanctions Over Ukraine Escalation

An array of crypto-related services have been targeted in the latest round of sanctions on Russia approved by the EU....

The Hideaways Confirms Another Price Rise! Will Dogecoin Explode In 2023? Will LUNA Explode In 2023? We Take A Look At All 3 Projects. The Hideaways Confirms Another Price Rise! Will Dogecoin Explode In 2023? Will LUNA Explode In 2023? We Take A Look At All 3 Projects.
Uncategorized11 hours ago

The Hideaways Confirms Another Price Rise! Will Dogecoin Explode In 2023? Will LUNA Explode In 2023? We Take A Look At All 3 Projects.

The weekend was good so far for Dogecoin (DOGE) holders as DOGE price surged to make a new weekly high....

Why This Coin Is Still Attracting Terra (LUNA) And LUNA Classic (LUNC) Investors Why This Coin Is Still Attracting Terra (LUNA) And LUNA Classic (LUNC) Investors
Terra11 hours ago

Why This Coin Is Still Attracting Terra (LUNA) And LUNA Classic (LUNC) Investors

Over the last few weeks, the performance of the Terra (LUNA) and LUNA Classic (LUNC) coins has been very volatile....

Will This Coin Be The Ethereum (ETH) And Ripple (XRP) Killer? Read More Will This Coin Be The Ethereum (ETH) And Ripple (XRP) Killer? Read More
Bitgert11 hours ago

Will This Coin Be The Ethereum (ETH) And Ripple (XRP) Killer? Read More

If you have been around the crypto market for a while now, you must have come across Bitgert (BRISE). The...

Artificial Intelligence Market Size To Reach US$407 Billion By 2027 Artificial Intelligence Market Size To Reach US$407 Billion By 2027
Latest News11 hours ago

Artificial Intelligence Market Size To Reach US$407 Billion By 2027

The artificial intelligence market size is driven by big data, cloud applications, and services Artificial Intelligence is inarguably the most...

Court filing ‘doxing’ Celsius users draws questions on KYC, bankruptcy processes Court filing ‘doxing’ Celsius users draws questions on KYC, bankruptcy processes
Bankruptcy11 hours ago

Court filing ‘doxing’ Celsius users draws questions on KYC, bankruptcy processes

Court filing ‘doxing’ Celsius users draws questions on KYC, bankruptcy processes Samuel Wan · 26 seconds ago · 2 min...

Best New Crypto To Invest In? The Hideaways Up 450% And Going Strong As LUNA And LUNC Drop Best New Crypto To Invest In? The Hideaways Up 450% And Going Strong As LUNA And LUNC Drop
Uncategorized11 hours ago

Best New Crypto To Invest In? The Hideaways Up 450% And Going Strong As LUNA And LUNC Drop

LUNA and LUNC’s prices surged again recently, creating new weekly highs before the market experienced a pullback. Investors have been...

Mortgage Interest Rates Today, October 7, 2022 | Rates Go Up Mortgage Interest Rates Today, October 7, 2022 | Rates Go Up
rates12 hours ago

Mortgage Interest Rates Today, October 7, 2022 | Rates Go Up

Advertiser Disclosure Jason Stauffer Jason Stauffer Staff WriterAdvertisement Jason Stauffer is a personal finance reporter who previously covered the housing...

Binance resumes BSC bridge operation after 2M BNB exploit Binance resumes BSC bridge operation after 2M BNB exploit
Exchanges12 hours ago

Binance resumes BSC bridge operation after 2M BNB exploit

Binance resumes BSC bridge operation after 2M BNB exploit Christian Nwobodo · 41 mins ago · 2 min read The...

Crypto Exchange Okx Blocked By Russia’s Telecom Watchdog Crypto Exchange Okx Blocked By Russia’s Telecom Watchdog
ban13 hours ago

Crypto Exchange Okx Blocked By Russia’s Telecom Watchdog

Russian media and communications regulator, Roskomnadzor, has restricted access to the website of a major cryptocurrency exchange, Okx. The trading...

Grifters rug over 60 ETH from spoof token created after Binance exploit Grifters rug over 60 ETH from spoof token created after Binance exploit
Binance13 hours ago

Grifters rug over 60 ETH from spoof token created after Binance exploit

Grifters rug over 60 ETH from spoof token created after Binance exploit Oluwapelumi Adejumo · 3 hours ago · 2...

CryptoSlate Daily wMarket Update – Oct. 6: Market turns red as BTC dips below $20,000 CryptoSlate Daily wMarket Update – Oct. 6: Market turns red as BTC dips below $20,000
Featured14 hours ago

CryptoSlate Daily wMarket Update – Oct. 6: Market turns red as BTC dips below $20,000

CryptoSlate Daily wMarket Update – Oct. 6: Market turns red as BTC dips below $20,000 Monika Ghosh · 3 hours...

Scammers Are Targeting Cryptocurrency Scam Sites To Hijack Their Targeted Audience Scammers Are Targeting Cryptocurrency Scam Sites To Hijack Their Targeted Audience
Best Practices15 hours ago

Scammers Are Targeting Cryptocurrency Scam Sites To Hijack Their Targeted Audience

Cryptocurrency scam sites are being targeted by other scammers to hijack their traffic and their possible earnings. A recently detected...

Fully funded Chevening Clore Leadership Scholarship 2023/2 Fully funded Chevening Clore Leadership Scholarship 2023/2
Scholarships15 hours ago

Fully funded Chevening Clore Leadership Scholarship 2023/2

A Fully funded Chevening Clore Leadership Scholarship 2023 is currently ongoing for qualified international students. This scholarship programme is aimed...

Fidelity Launches Ethereum Index Fund — Sees Client ‘Demand For Exposure To Digital Assets Beyond BTC’ Fidelity Launches Ethereum Index Fund — Sees Client ‘Demand For Exposure To Digital Assets Beyond BTC’
bitcoin etf17 hours ago

Fidelity Launches Ethereum Index Fund — Sees Client ‘Demand For Exposure To Digital Assets Beyond BTC’

A filing with the U.S. Securities and Exchange Commission has shown that Fidelity looks to launch an investment product known...

Trending

Free Bitcoin MiningEarn from $50 to $75 daily with just your phone