JACKSONVILLE, Fla. — Borrowing money for everything from cars to houses and credit cards just got more expensive.
The Federal Reserve has raised the interest rate by a half a percent to fight inflation.
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“The first thing is where people will see in the beginning here is going to be in their credit card rates, and any other variable-type rate like that like a home equity line of credit. And in the long term it’ll affect their auto loan rates,” David Marovich, CEO of 121 Financial Credit Union said.
He adds that people are going to have to buckle up:
“As the year rolls on and we see more of these rate hikes that they’re talking about, it’s gonna have a bigger impact as we go through the year,” he said.
The fed’s rate increase affects the cost of many loans, and it was intended to make borrowing more expensive to stem record inflation. But for individual borrowers, in the short term, it’s not welcome news.
“Dealing with these interest rates and the situation with the economy and everything, it’s just like you can’t win, any way you go,” Emmanuel Alexander said.
He’s trying to buy a house, but has found the rising interest rates are making it more difficult to find a home with a decent mortgage.
“The payments per month have changed from $1,100 to $1,500, and that’s an extra $400 dollars that you have to have come out of your pocket to pay,” he added.
Some fear raising interest rates too quickly will spark a recession. Marovich doesn’t think that will happen, but he does say there will be rate increases through the end of the year and possibly into 2023.
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“I don’t think this rate hike will have that big of an impact. We have to look ahead though, if we do have as many as they’re saying, that’s when we’re gonna really start to see a big impact. After two or three of these, it’s gonna have a major impact for a lot of people,” Marovich explained.
He says if your credit card has a variable interest rate, make sure you pay it down. If you can’t afford that, look for a card that has a fixed rate.
As for Alexander:
“I think the only thing that we could do is pretty much just stay in the box until everything calms down.”
He may hold off on buying a house if necessary.
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