The Federal Reserve raised interest rates by 0.75% on Wednesday which can affect Floridians in many different ways.
Experts WINK News spoke with recommend comparison shopping when it comes to things like auto-loans. Check with a few different banks and credit unions and avoid taking the first loan that’s offered to you.
And with credit card debt, call the number on the back of the card, and ask if you qualify for a lower interest rate.
And, if that doesn’t work, you can also look for a balance transfer credit card. You might be able to move your credit card debt and avoid paying higher interest.
Inflation has gotten to levels we haven’t seen in 40 years. WINK News spoke with Victor Claar Ph. D., associate professor of economics at FGCU for some insight.
“Normally when inflation is up, it’s because there’s too much demand chasing too little supply. And in the present economic climate, because of the pandemic, we’ve actually had too little supply because of supply chain disruptions,” Claar said. “And at the same time, a lot of the federal spending the government did, it drove up the demand in ways that the Fed hadn’t really taken into account.”
To try to get inflation under control, the Federal Reserve is raising interest rates. This is the fourth time this year, increasing the Federal interest rate by a total of 2.25%.
“So right now, the Fed is trying to use interest rates to drive down demand because if you have a choice between slowing the economy and getting inflation under control, right now they view inflation as the much bigger threat,” Claar said.
The interest rate hike will impact new car loans, home mortgages, as well as credit cards that carry a balance.
“Your credit card interest rate is going to adjust within a couple of weeks of that decision,” said Sara Rathner a personal finance expert for Nerd Wallet. “So, you might notice over the next few weeks the interest rates going up on some of the cards that you carry. And that means that if you have credit card debt, it is going to get slightly more expensive compared to how it might have been in the past.”
And people are already stretching their dollars to make ends meet. They say they’ll have to be extra careful financially with rising interest rates.
“You got to plan for what you absolutely need, a roof over your head, food on the table,” said Thomas Nitzche, a Fort Myers resident. “And then you’ve got to like take into account the cost of borrowing right now and the cost of everything. So, it’s going to get ugly for a lot of people right now.”
Claar explained it isn’t all bad news with rising Federal interest rates. He said for the first time in a long time, people will be able to earn higher interest on their savings accounts. And that could be good news for retirees who are living off their savings.