What does the Federal Reserve rate hike mean to you?

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What does the Federal Reserve rate hike mean to you?

Although the typical car payment has risen to its highest level since 2012, no Fed increase is expected to make a meaningful difference — at least not yet.

“Car loan rates will increase as the Fed raises interest rates, but it will be a non-issue for car buyers because it has such a limited effect on monthly payments,” said Mr. McBride, a quarter of a percentage point. The difference is a $25,000 loan at $3 per month. “One will not need to reduce from SUV to compact because of rising rates,” he said.

Many people have deposited additional funds into their bank accounts over the years, but whether the rate hike translates into more attractive returns depends on the type of account you have and the institution you are doing business with. Is.

A rise in Fed benchmarks often means banks will pay more interest on deposits — but not necessarily immediately. Banks raise rates when they want to bring in more money, but the biggest banks already have a lot of deposits. This leaves them with little incentive to pay more to depositors.

Smaller banks and online banks tend to pay better rates than larger institutions, according to Ken Tumin, founder of, part of LendingTree. And some of them, especially the savings units of credit-card banks including Capital One and American Express, have started raising their rates slightly, he said.

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But overall rates remain quite low. According to, the average online savings account was paying just 0.49 percent in March; A year ago the average was 0.48. At brick-and-mortar banks, the average savings account paid 0.12 percent in March, down slightly from 0.15 a year ago.

Certificates of deposit, which track similarly dated Treasury securities, have already begun to grow somewhat higher, especially among online banks: average one-year CDs at online banks are up 0.67 percent in March, up from 0.51 percent in January. percent, while the average five-year CD is 1.08 percent, up from 0.86 percent in January.

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