Consumer Alert: The Fed hikes rates again! Here’s what you can do to protect your wallet
ROCHESTER, N.Y. (WHEC) — It’s official. Analysts have been predicting that another big interest rate hike was coming, and on Wednesday, the Fed did as expected. It’s a giant hike of three-quarters of a point—the third in a row.
Homebuyers are being hit the hardest. In January the average rate for a 30-year mortgage was 3.1%. Now it’s more than double that, 6.38%
Want a new car? The average rate for loans is up more than a point. The entire rate hike isn’t currently being passed along to consumers because some automakers subsidize loans to attract buyers. But even still, auto loans are at their highest level since 2012. They’re up from 3.86 in January to just over 5% today. That will price many lower-income buyers out of the market.
And credit card rates are the highest they’ve been in more than 25 years. And because inflation is raging, more of us are relying on credit cards to make ends meet. Polls show that we’re quickly spending down savings accumulated during the pandemic and going deeper in debt.
News of rate increases usually send the stocks plunging, which means your 401k takes a hit as well. And Fed members indicate they intend to continue aggressive rate hikes through the end of the year. It’s all designed to slow the economy and slow inflation. But slowing the economy means people will lose jobs. The Fed predicts the unemployment rate will rise to 4.4% in 2023. So according to The Wall Street Journal, that means mean 1.2 million people could lose their jobs.
So CNBC has advice for all of us to prepare for a possible recession.
• Update your resume. Now may be the time to get more training and improve your skills
• Reduce expenses by first looking at your recurring charges and eliminate anything that’s not necessary.
• Stay invested. It’s hard to watch your 401k take a hit, but remember you’re in this for the long haul.
• Build an emergency fund. Experts recommend enough savings to cover three to six months.
• Pay down debt. The national average credit card rate is now more than 17%.
A recent survey indicated that 74% of us are concerned about the possibility of a recession. We’re not alone. Economic analysts are as well. But we can weather a financial storm with some planning.
Here’s NBC News’ report on the increasing interest rates: