Fed Making Moves: Potential for December Rate Hike
The interest rates paid on borrowed money (and earned on certain bank accounts) are often tied to decisions made at Fed meetings. And every time the Fed increases the federal funds rate, it's not long before consumers pay higher rates on money that’s already borrowed -- unless the account comes with a fixed rate.
So, if you're among the 38 percent of U.S. households with credit card debt, you can generally count on any move by the Fed affecting the interest you pay on it.
When will the next rate hike happen?
It’s been strongly suggested that one is coming in mid-December of this year. And in related news, a new Fed chair is also in the works with that change coming February of 2018. Jerome Powell is expected to be the next in line, pending confirmation by the Senate. Along with a new chair will come a new strategy in influencing interest rates.
How will you be affected?
That said, now is the time to be proactive in taking care of high-interest debt. According to creditcards.com data, the average interest rate is 16.15%. That’s not capturing retail credit card data, which is currently averaging around 24.99%. So if you have a $200 balance on your favorite department store’s credit card, you can expect to pay an extra $50 in interest alone.
Why waste your money?
Refinancing is a great way to take care of high-interest debt. Current mortgage interest rates are in the high 3’s. So, you can refinance to lower your rate and save hundreds each month. You can use those savings toward faster credit card payoff. Or, depending on the amount of equity you have in your home, you can even do a cash-out refinance to pay off serious debt amounts. If you live in the West or South, chances are you are enjoying above-average housing gains -- making a cash-out mortgage refinance even more attractive.
Regardless of where you live, a mortgage refinance can be an extremely beneficial financial savings tool. The best way to learn more is to discuss your personal goals with a salary-based mortgage expert. You can get answers to your questions and choose a custom home loan that’s a better fit for your current (and future) needs. Get started today!