How the Fed’s Interest Rate Hike Can Actually Help You

Interest rates are rising again. on wednesday, The Federal Reserve has announced a rate hike Between 5% and 5.25%. The move marks the tenth time the Fed has raised interest rates since March 2022.

Using a credit card will become more expensive. Same goes for getting a mortgage or personal loan. It can also reduce the residual interest in mortgage refinancing for existing homeowners.

That said, the news is not all bad. In fact, there is a silver lining that many Americans can now take advantage of. A rise in interest rates can actually help you by increasing the money you can earn on a car loan High Yield Savings Account And Certificate of Deposit (CD).

Don’t have a CD or high yield account? don’t worry Start exploring your high-yield options here now to see how much more you can earn

How the Fed’s Interest Rate Hike Can Actually Help You

Higher interest rates are not usually great news. However, they can actually be a boost for account holders with the following:

High Yield Savings Account

If interest rates on mortgages and credit cards are rising, they are also rising High Yield Savings Account, making now a great time to open one. The average interest rate on regular savings accounts is around 0.39% per annum, according to FDIC. But high-yield account rates are higher in the 3.5% to 4.5% range. And after Wednesday’s rate hike, it’s possible, if not more, that those rates will go even higher. That means you are now leaving money on the table by not acting.

how much money For example using a $5,000 deposit, you’ll increase your bottom line to $5,019.50 if you keep your money in a regular account. If it were transferred to a high-yield account with a 3.5% rate, it would be transferred to $5,175 — and that’s at 3.5%!

With the amount of options currently in the market and this week’s Fed rate hike, you may be able to get a higher rate. But act now to take advantage. Interest rates on high-yield accounts are adjustable so they can fall in the future if inflation is controlled and the Fed refrains from future action.

Explore your high-yield savings account options here to learn more

CD account

With a CD, you lock in your money for a certain period of time. If you cut from it before that duration Expired will incur a penalty, which can wipe out all or most of the interest you’ve earned. Note that CDO is also offered Rapidly higher interest rates than a regular savings account. Those rates, too, may rise after recent Fed activity. So if you’re willing to put a portion of your funds in a CD, Now is a great time to do it.

One way is the CD different Compared to high yield savings accounts their rates are fixed. If the rate environment changes in a negative fashion during your tenure (for example, inflation cools and rates fall again), you’ll still be locked-in at the higher rate you opened your account with. Conversely, if rates go up again, you won’t be able to take advantage. If this is a real concern—but you still want to earn the interest that’s currently being offered—you might want to keep chunks of your money in different CDs at different times (the ladder) so you can adjust to any changes in interest rates.

Check out your CD account options here to see how much more you can earn.

Bottom line

You were looking to buy a house this spring Or considering your current refinancing, the Fed’s announcement this week was discouraging. But, if you have money to spare, a rate hike can actually benefit you. You can weather the rate hike by moving some money into a high-yield savings or CD account (or both). your advantage. Just be sure to shop around and check fees and balance requirements in addition to interest rates before committing to a particular bank or lending institution.