CHARLOTTE, N.C. — Interest rates are expected to rise this year to combat inflation but how will that impact your finances?
The federal funds rate, which is set by the central bank influences the prime interest rate, which is what lenders use to determine how much interest you'll pay on credit cards, mortgages and other loans.
When the federal funds rate goes up, the prime rate tends to follow.
"I think there's quite a bit of room to raise interest rates without threatening the labor market," Fed Chair Jerome Powell, said.
WCNC Charlotte is always asking "where's the money?" If you need help, reach out to the Defenders team by emailing money@wcnc.com.
So what can you do now? Refinance your mortgage or private student loans at a lower rate. The difference between 3 and 4% interest on a $300,000 mortgage is $53,000 over 30 years.
Now is also a good time to pay down high interest consumer debt like credit cards, since those interest rates change with the prime rate.
And try to improve your credit score. Borrowers with higher credit scores get better terms. Pay down debt, keep your credit usage low, and never miss a payment.
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