MEMPHIS, Tenn.– Interest rates are going up which could affect you and your family.
The Federal Reserve raised its benchmark interest rate by a quarter percentage this week.
Which could mean you’ll pay more for home mortgages, car payments and credit cards.
“The Federal Reserve raised interest rates by .25 we call it basis points,” said Financial Advisor Martavius Jones.
So what does this mean for you? Martavius Jones, who also serves as a Memphis city councilman, explained to WREG Thursday.
“People who have an adjustable rate mortgage. They can see that rate increase if you have a credit card that’s tied, it has a variable rate you can see that cost go up. You’re looking at refinancing or even purchasing a mortgage you can have a higher cost across the board of borrowing,” he explained.
Jones said we’ve been in an environment of low interest rates for awhile. According to the Federal Reserve Chairman the reason for the increase is the economy is doing well and that doesn’t appear to be changing. Jones says it’s a way of “cooling off the market.”
If you have sizable credit card debt or looking to get a new car you could be impacted.
“You have a 2000 Beetle and it’s time for you to get a new car well you’re going to be paying a little bit more,” he said.
“I don’t do credit cards period. I want my credit to stay where it’s at,” said consumer Kaylia Morphis.
Interest rate increases like what we’re seeing today is why Morphis keeps credit cards out of her life.
“I know me and my spending habits it wouldn’t work out,” she said.
Studies show many Americans don’t follow her habits. According to a 2013 Survey of Consumer Finances nearly 40% of U.S. Households reported having credit card debt and those borrowers reported to be $5,700 in debt. Those who are affected the most are those who can’t afford to be in the red—with lower income families having more than $10,000.
Jones says bottom line—if you don’t have the money, don’t spend it. Try saving.
“In a tight economy every dollar counts, but on the flipside of it we may see some increases in bank rates and saving rates,” he said.
Experts expect there will two more rate increases this year.