Posted: Jun 22, 2022 12:01 AM
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If you think runaway inflation is brutal, wait until you get hit by the cure.
Last week, the Federal Reserve raised the interest rate on money it lends to other banks by .75%, the biggest hike in three decades. Fed Chair Jerome Powell said the hike is necessary to rein in skyrocketing inflation. He’s planning more hikes in the coming months. These hikes will lead to increased interest charges on credit cards and higher rates on home equity loans, car loans and mortgages. It’s a punch in the gut for people who need to borrow.
Get ready for the interest rates on your credit card to top a budget-busting 20% two monthly statements from now — up from a current average of 14.6%.
If you’re shopping for a home or a car, adjust your expectations downward. You will now be able to afford less than you thought because monthly payments will include significantly higher interest costs.
The Fed has no choice but to act.