The Fed recently raised its key short-term interest rate to a range of 0.75% (three quarters) to 1%. That's the highest the rate has been since 2008, and it's the first time the Fed raised its rate this year. The Fed kept the rates low for so long to help stimulate the economy after the financial crisis.
Let’s see what the rate hike means for you and me. First, the Fed would only be raising rates if it was confident the economy would continue to improve. That’s good news for Main Street even as interest rates rise, because continued growth hopefully comes along with more jobs and eventually, rising wages as well.
People looking to buy a home however, are experiencing higher prices and now higher interest rates as well.
Following the last two Fed rate hikes, major banks were quick to raise rates that borrowers pay on loans. But don’t expect the banks to suddenly pay higher interest on your savings account. Savings rates have barely budged over the last year.
We have to do the best we can with our finances as these adjustments happen.
Go to yoursafemoneyshow.com and check out the color of money risk analysis, it's a free interactive tool for you to find your risk tolerance.
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