How the Fed Rate Increase Affects Your Mortgage, Car Loan and Credit Card Bill
So mortgage rates, which have hovered below 4 percent for much of 2017, are less sensitive to incremental rate increases than
to changes in the yield of the 10 year U. S. Treasury note, which stayed low this year even as the Fed rate ticked up.
After a quarter-point increase in the Fed’s rate, each household can expect to pay an
average of $919 a year in credit card interest, up from $904, according to the study.
Consumer groups suggest that debtors who cannot pay off their monthly credit card balances transfer the debt onto a card
that does not charge interest for several months, and then clear the amount owed before the card switches to a variable rate.
Students who already have a fixed-rate government loan will not see a change,
but the interest rates on private variable-rate loans will probably rise because of the Fed’s action.
Anyone with a credit card will see a small but instant shock to their interest rate,
followed by borrowers with student and auto loans and, eventually, mortgage holders.
This could cause payments to balloon, because credit cards tend to compound interest, requiring
consumers to pay interest on their base balance and on the accrued interest.
At the Fed’s final meeting of the year, and the last one for Janet L. Yellen, its chairwoman, the board of governors
set the target federal funds rate between 1.25 percent and 1.5 percent, a quarter-point increase.