Rate Increase: How it affects your credit now

The Federal Reserve ordered another large jump in interest rates today, and indicated that even more rate climbs are likely in the coming months, as they attempt to put the brakes on high prices.

“So what they’re trying to do is use interest rates as a tool to slow consumption so they’re prepared to raise interest rates to a point where consumption slows so that the price increases in the future don’t go up as rapidly as what we’ve seen in the last 12 months,” says Joe Artim, Director of Financial Markets Program at University of Minnesota Duluth.

The central bank raised its standard interest rate by 0.75 percentage points Wednesday, matching hikes in June and July. The Fed has been boosting borrowing costs at extremely fast rates in the past decades. But so far, its actions have done little to curb the rapid run-up in prices.

“The price increases that we’re seeing in the economy across the entire landscape are much higher and stronger than what the Federal Reserve Bank deems acceptable. So what they’re trying to do is use interest rates as a tool to slow consumption,” Artim continues.

So what does this mean for the everyday consumer? Well, Artim gives three tips for those trying their best to manage these upcoming hike in rates.  First, pay off or down the debt you have with the highest interest. Second, manage your purchasing on a card so you can pay it off on a month to month basis. Lastly, seek advice. Do not be afraid to talk about your situation with a local banker and see what your options are.