From Holden Lewis @www.bankrate.com:
“The Federal Reserve raised a key short-term interest rate today, reassuring investors that major combat operations against inflation are not over.
The Fed’s Open Market Committee increased the target for the federal funds rate a quarter point, to 2.5 percent. The prime rate will rise to 5.5 percent. Consumer loans based on the prime rate—variable-rate credit cards and home equity lines of credit, for the most part—can be expected to rise in the coming days and weeks.
Short-term rates have gone up 1.5 percentage points since the end of June. In that time, the Fed’s rate-setting committee has met six times, and each time it raised the federal funds rate by a quarter of a percentage point. In today’s after-meeting statement, the committee hinted that more rate increases are in store.”
What does this mean to you in a nutshell?
- Credit Cards:
Credit cards with variable rates will raise their rates.
Note: Folks with credit problems will be seeing higher interest rates! - Money market mutual funds:
Yields will increase. - Money market accounts:
Banks may reward depositors...but don’t count on it. - Certificates of deposit:
Yields on CDs may vary depending on the length of maturity - Auto loans:
Not affected - Home equity lines of credit:
A modest increase in the early years of a HELOC - Home equity loans:
Long term rates will not be affected - Adjustable-rate mortgages:
Interest payments could definitely increase - Fixed-rate mortgages:
Tied to long term rates, should not be affected
source: http://www.bankrate.com/nltrack/news/fed/how-soon.asp
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