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Here's what the latest interest rate hike means for you

While your existing fixed-rate loans like a mortgage or car payment won't be affected, new loans will be affected.

INDIANAPOLIS — Rate changes are used by the Federal Reserve as an accelerator or brake on the economy.  

And because of persistent inflation, the Fed is still pumping the brakes.

Wednesday, it raised its benchmark interest rate by .25 points.  

Greg McBride with Bankrate said the impact of a single quarter-point interest rate hike isn't all that significant considering the big increases we saw last year. Those hikes were .75 points.

However, he added that those increases still haven't fully worked their way through the economy. 

"For that reason, they need to raise interest rates here, at least a couple more times here in 2023," McBride said. 

So, how does all of this affect your wallet? 

While your existing fixed-rate loans, like a mortgage or car payment, won't be affected, new loans will be affected.

Debt with a variable rate, or a rate that changes, can go up as early as the next billing cycle. Those include a home equity line of credit and credit cards.

"If you've got good credit, look at one of those 0% or other low-rate balance transfer offers. Some of these 0% offers last as long as 21 months," McBride said. "That's a great way to not only insulate yourself from further rate hikes, but then it gives you this runway where you can get that debt paid off once and for all."

You can also call your card company and ask for a lower rate. 

As for opportunities, look at where your money is parked. Savings rates and certificate of deposit rates are up, with many paying more than 4%. Keep in mind, for a CD, your money needs to sit tight for a period of time. 

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