Interest rate hike and your wallet

Now that the United States apex bank has increased rate yet again,  what to expect in the coming days. The Fed’s increase this month was the third rate rise since the financial crisis, and policy makers expect another two hikes this year. In contrast, an entire year passed between the first interest-rate increase in December 2015 and the second in December 2016.

The Apex bank's monetary policy committee raised the federal funds rate by a quarter of a percentage yesterday. The prime rate is now at 4%. Here are some of the implications;

Credit cards will become more pricey.  It's  going to cost you more to carry balances on your credit cards so be smart, pay things down as a matter of priority. You might also consider transferring balances on your credit cards if you absolutely cannot get rid of the balances right away. Lots of credit card companies offer zero percent interest rate on balances transfers for 6, 12 months or more. Look for offers that are good for you.

Rates on Home Equity Lines of credit, traditionally reffered to as helocs  will slide up. This is because the rates are tied to prime rate. The best thing to do is to make sure you always make extra payments towards principal each time you make payments on your home equity lines of credit. Do not make only the required minimum payments  because they are interest only and will not reduce your principal balance on the long run.

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