Fed Raises Interest Rates, Brings Borrowing Costs to New High

The Federal Reserve raised interest rates for the first time since summer 2023, increasing the cost of borrowing from 3.75% to 4.00%. This move is aimed at curbing inflation, which the Fed says remains elevated.

The rate hike will likely have a significant impact on consumers and businesses alike. For those planning to make large purchases, such as homes or cars, the new interest rates will increase monthly payments and costs for existing credit card debt. Many Americans are already struggling with high living costs and rely on credit cards just to get by.

Average loan rates have already reached 7% for new cars and a staggering 10.6% for used ones last month, according to Edmunds. With the average monthly payment sitting at $765, the latest rate hike will make driving off the lot even more expensive. However, savers may benefit from this decision as interest rates on savings accounts and CDs are likely to increase.