'Extraordinary' rate hike comes on the heels of another sharp increase in June. That means debt is about to get more expensive.
amid a spike in mortgage rates and some consumers holding off on major purchases.
Every 0.25 percentage-point increase in the Fed's benchmark interest rate translates to an extra $25 a year in interest on $10,000 in debt. So Wednesday's 0.75 percentage-point hike means an extra $75 of interest for every $10,000 in debt. "They aren't stopping anytime soon, but I don't think we'll remain in 5th gear for all that long," Schulz noted.The stock market has taken a beating this year amid the impact of high inflation and the Fed's series of rate hikes.
Indeed, credit card rates have already risen in response to the Fed's previous rate hikes, with the average rate on a new card now at 20.82%, according to LendingTree data. That's the highest average since at least August 2019. "The good news is that those offers are still widely available and plentiful if you have a good credit score," Schulz noted. That would help consumers with credit scores of about 700 and above, he noted.
"[M]ortgage rates could trend up over the next few weeks," noted Jacob Channel, senior economist for LendingTree, in an email prior to the Fed's announcement.
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