🎶They played with the rates, got lost in the game🎶…Ooo baby, baby! Sing it if you know it. 🎤
Is this record broken or what? 😵💫💿 The Fed raised interest rates again this week and it's our paycheck-ly duty to report on it. So what's so special about this hike and what does it mean for you? Read on, friends.
Here’s Five Fast Facts about the latest interest rate raise:
- 📻 Same Old Song - This past Wednesday, the Fed raised its short-term borrowing rate another 0.25%. This additional hike comes less than a week after new data showed the nation's economic growth slowed over the first three months of 2023.
- 🪩 All Panic, No Disco - The Fed's interest rate hikes are a major reason why many U.S. banks are hitting the panic button. Three out of the 30 largest banks in the country have failed since March.
- 🕰️ And I Think It's Gonna Be a Long, Long Time - This latest interest rate increase puts the benchmark federal funds rate between 5% and 5.25%, the highest it's been in over 15 years.
- 🤷🏽♀️ So What About Me? - When the Fed raises the benchmark interest rate, the cost of borrowing also increases. In other words, interest rates on personal loans, home equity loans, and auto loans are higher and it may be tougher to qualify. Higher interest rates also spell trouble for those with credit card debt, since those interest rates can climb along with the Fed hikes. Those already in a pile of debt might find it even harder to dig out.
- 🛒 Hey, Small Spender - To bring inflation down to 2% (where the Fed wants it), people are going to have to spend a whole lot less on their shopping trips. The bad news? A big decline in spending could be a recipe for recession.
🔥Bottom line: The silver lining? Interest rate hikes from the Fed also mean higher interest rates for savings accounts and CDs. 🤑 If you have some cash on the sidelines, why not stash it in a high yield savings account and take advantage of the madness?! If you don't have extra cash on hand and need to build an emergency fund, head here to find out how.
Are you sick of interest rate hikes?!
Let us know by connecting with us on Facebook and Instagram! Also, remember to share this newsletter with your friends & coworkers!
Btw, If you’ve read this far and haven’t yet signed up for the weekly Paycheckology newsletter, CLICK HERE!
