加息“如约而至”，美国人的钱包大受影响

To help combat the record-high inflation plaguing U.S. consumers, the Federal Reserve on March 16 approved a 0.25 percentage point interest rate increase.

That might not sound like a big deal, but it's the first time the Fed has raised the Federal funds rate in three years, and the first change since it was set to zero at the start of the coronavirus pandemic. This rate hike (which has been discussed for months) is happening amid increased fears of a recession and with inflation shooting up by 7.9% in February, compared to a year ago. With the crisis in Ukraine and ongoing supply-chain issues, economists expect inflation to keep rising in the months to come.

“We are attentive to the risks of further upward pressure on inflation and inflation expectations,” Fed Chairman Jerome Powell said on March 16 during a press conference. “The committee is determined to take the measures necessary to restore price stability. The U.S. economy is very strong and well-positioned to handle tighter monetary policy.”

The hope is that increasing borrowing costs will translate into consumers spending less, which will help prices come down. The Fed raising its benchmark rate sends a signal that the broader economy needs to cool off, says Julian Brigden, president and cofounder at Macro Intelligence 2 Partners. It helps steady the economy. The Fed will likely raise rates a few more times throughout 2022.

"Things are starting to get painful for the average man on the street," says Brigden. "What we're doing at the moment is not sustainable."

But raising interest rates will have ripple effects on household budgets too. Here's how it could impact the average American’s wallet.

Credit card debt

The most immediate effect of a Fed rate hike is that the APR on variable credit card debt will increase in tandem, says David Silberman, senior fellow at the Center for Responsible Lending.

Though it will increase only by 0.25 percentage point, those with debt will end up paying more toward their minimum payments, and it will ultimately take them longer to pay off their balance(s). How much more consumers will pay depends on the size of their debt and their interest rate (the national average APR is 16.17%, according to CreditCards.com).

"Some people are paying only the minimum payment because that’s all they can afford," says Silberman. "That minimum payment is going to go up, and it’s going to be a strain on their budget."

Savings account interest

While banks will be quick to increase credit card interest rates, they will likely be slower to raise savings account yields, says Silberman. "Count on your credit card debt [rising], and hope for your savings," he says. Where high-yield savings accounts once offered customers interest rates over 2%, the most generous APYs have sat around 0.5% since the start of the pandemic (and the average nationwide APY is 0.06%).

If deposit rates do follow suit, online banks and institutions competing for customers nationwide will likely be the first to raise their rates, rather than traditional brick-and-mortars.

And even if savings yields increase somewhat, any money sitting in cash will lose some value thanks to inflation. That doesn't give you an excuse not to have an emergency fund, but it's something to keep in mind when deciding how much to stash away. Most experts recommend between three and six months’ worth of living expenses.

Student loans

Federal student loan rates are not variable, so the Fed's moves won't affect existing accounts. But it could increase interest payments for loans taken out by students for the coming school year, says Silberman. Congress sets federal student loan interest rates for each upcoming school year on July 1.

Borrowers with private loans with variable rates could also see their interest rates rise. If possible, it might make sense to refinance those loans now to lock in a lower interest rate.

Auto and mortgage loans

The Fed's movement won't have much of a direct impact on longer-term loans for cars or homes. Mortgage rates fluctuate depending on the 10-year U.S. Treasury, overall economic conditions, and inflation, among other factors.

That said, interest rates for mortgages have been inching higher: The average 30-year fixed-rate is at 4.27%, according to Bankrate, more than a full percentage point higher than it was a few months ago.

Stocks

One of the reasons the Fed needs to raise rates is to signal to the stock market that "the best of times are behind you," says MI2’s Brigden.

That doesn't mean to stop investing; it simply means that the extraordinary growth of the past two years is not sustainable going forward. Consumers would be best served paying off high-interest debt, refinancing their debt to lock in a lower rate now, or simply saving more.

“It’s a time to become more cautious in your investment stance,” Brigden says. Less liquidity could trigger some volatility in the stock market, which investors should be aware of.