Dec 162015

Hi guys,

Just a quick note to let everyone who hasn’t already heard know that the Federal Reserve Bank has raised its “Funds Rate” by a quarter point today, from .25% to .50%.
Cutting quickly to the chase, here’s how it can affect American consumers like you and me:
  • Consumers with adjustable interest rates on their loans will see payments increase. Unfortunately, payments will increase and those with adjustable rates will be paying more toward interest. This adjustment will be relatively modest though. For example, a $500k loan with 30-yr term at 4.5% that increases to 4.75% should see an increase of about $75 per month.
  • Savers will see improvement in their interest return. Savers have been hurt over the past six years with record-low rates. Many retirees who draw income from their savings will benefit as higher rates will begin to favor savers.
  • Credit card and Equity Line rates will increase, as credit cards and Equity Lines are linked to the prime rate. As rates increase, so will the interest rates on these financial products. Again, the change should be relatively modest for most folks. An example payment increase for an equity line of $50k pegged to the Prime Rate with an interest-only payment should see an increase of around $11.

Here are some good articles I’ve found that are helpful if you want to learn more:

Best wishes,