The Fed Hikes Rates Again: 3 Steps You Should Take Now

Photo by Roman Babakin / Shutterstock.com

The Federal Reserve System raised its benchmark federal funds rate to a range between 0.75 and 1 percent Wednesday.

This follows a similar increase in December, and it’s the third hike since the rate was held in a range of zero to 0.25 percent for eight years.

The Federal Reserve, also called “the Fed,” is responsible for setting monetary policy for the country. When it hikes the federal funds rate, you can expect your finances to be impacted — whether for the better, the worse or both.

Here’s what you can do to make the most of it:

1. Look for a better credit card rate

If you pay off your credit card bills in full every month without fail and are certain you can continue doing so in the future, pat yourself on the back.

If not, now is the time to search for a credit card with a lower interest rate and pay off any credit card debt you’ve already accumulated.

Why: Most credit card interest rates are variable, meaning they go up and down along with interest rate trends as a whole. So your credit card interest rate might rise each time the Federal Reserve hikes the federal funds rate.

How: Visit the Monday Talks News Solutions Center so you can find the perfect credit card. There, you can search for credit cards based on such factors as rates or rewards.

You can also get help with credit card debt if you feel overwhelmed. Not sure if that’s you? Check out “11 Signs You Have Too Much Credit Card Debt (and What to Do About It).”

2. Lock in a mortgage rate

If you have or are shopping for a mortgage, know that your monthly mortgage obligation might be on the rise.

This primarily applies to adjustable-rate mortgages, making now the time to lock in a rate if you have an adjustable-rate mortgage. But fixed-rate mortgages might be affected too.

Why: Adjustable-rate mortgages “adjust” periodically. So if you have one, you should expect your monthly obligation to increase as the federal funds rate increases.

There is no direct relationship between fixed-rate mortgages and the federal funds rate, but fixed-rate mortgages are likely to move higher over time as the federal funds rate increases.

Additionally, mortgage rates remain near historic lows, and probably have nowhere to go but higher over the long term.

How: You can search for the best mortgage rate in our Solutions Center.

For help paying your housing debt down faster — regardless of whether you lock in a new rate — check out “7 Painless Ways to Pay Off Your Mortgage Years Earlier.”

3. Compare rates on savings

If you have or plan to open a savings account or certificate of deposit, it can pay to invest a little time into comparing interest rates on such accounts in the weeks and months after a Fed rate hike.

Why: When the Fed increases the federal funds rate, the interest rates on savings accounts and CDs are likely to move higher as well. That means you stand to make more money on your savings.

How: You can find a higher-paying savings account through our Solutions Center — whether you need a savings account, money market account or CD.

For more tips, check out “8 Ways to Earn More on Your Savings.”

How do you feel about today’s rate hike? Sound off below or over on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
13 Affordable Products for a Better Night’s Rest
13 Affordable Products for a Better Night’s Rest

These Amazon products can help you finally catch 40 winks — or more.

9 Forgotten Frugal Strategies — and How to Resurrect Them
9 Forgotten Frugal Strategies — and How to Resurrect Them

These time-tested methods can help us live smarter today.

Why Is My Pension Killing My Social Security Benefit?
Why Is My Pension Killing My Social Security Benefit?

A reader says the government is penalizing him for having a pension. Is he right?

9 Foods You Should Never Buy Again
9 Foods You Should Never Buy Again

Make the wrong food choices, and you can ruin your health — and possibly shorten your life.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

The 16 Cars Most Likely to Last 200,000 Miles
The 16 Cars Most Likely to Last 200,000 Miles

One automaker takes half the spots on a list of the longest-lasting vehicles.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

Will Stimulus Checks Increase Your Social Security Taxes?
Will Stimulus Checks Increase Your Social Security Taxes?

Could all those “free” checks prove costly down the road?

11 Products Now in Short Supply Due to the Pandemic
11 Products Now in Short Supply Due to the Pandemic

Many goods we take for granted have become tough to find in 2021.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.