Student Loans, Car Payments, Credit Cards: Here’s What May Cost You More As Fed Raises Interest Rates

Student Loans, Car Payments, Credit Cards: Here’s What May Cost You More As Fed Raises Interest Rates

Share to Linkedin The Federal Reserve is set to raise interest rates for the first time in more than three years on Wednesday in an effort to combat the quickest surge in prices in over 40 years, but a series of rate hikes will also make a slew of debt offerings more expensive. Federal Reserve Board Chairman Jerome Powell testifies during his re-nominations hearing before the ... [+] Senate last month. "Now is the time to aggressively pay down high-cost credit cards," Bankrate Chief Financial Analyst Greg McBride said in emailed comments, pointing out nearly all credit cards come with variable interest rates that fluctuate in tandem with the federal funds rate determined by the Fed. One rate hike alone isn't likely to have a considerable effect on smaller-ticket items including auto financing, but McBride notes uncertainty remains around how many more interest-rate hikes will come this year as the Fed looks to combat inflation amid spiking oil prices. Though federal student loans are doled out with fixed rates that won't be affected, private loans—which represent about 8% of the market with some $131 billion in loans outstanding—often come with variable rates that tick up after Fed hikes. "Volatile markets