On Wednesday the Federal Reserve increased its key interest rate by 0.25%, marking the first interest rate increase since June of 2006. According to financial professional Cathy DeWitt Dunn, the Fed is likely to increase rates even further in the coming year.
If you are planning on a major purchase, now would be a good time to lock in interest rates before they go up again.
The Fed raising the interest rate is good news for savers. While it is only a quarter of a percent, it still means higher rates on checking and savings accounts.
On the other hand, for those with credit card debt, a 0.25% increase in interest rates means that you’ll pay an additional $25 a year per in interest payments for every $1,000 in debt that you have accumulated.
While a quarter of a percent doesn’t mean much in the short term, it does however signal confidence by the Fed in economic conditions for the upcoming year.