Federal Reserve Hikes Rates for First Time in Three Years

The Federal Reserve has raised interest rates for the first time in three years, affecting how much consumers pay on credit card debt and earn on their savings. The Fed increased short-term interest rates by a quarter of a percentage point.

WSB Consumer Expert Clark Howard explained that this decision means higher credit card interest rates but also potentially higher returns on savings. For those carrying credit card debt, Howard recommends paying down the balances as soon as possible.

Howard noted that savers should check their current earnings and consider shopping around if they're earning less than 4%. KPMG Chief Economist Diane Swonk added that inflation has remained above the Federal Reserve's target for years, contributing to higher prices.