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Fed rate hike can affect consumer finances

This month, the Federal Reserve increased the rate of federal fund rate by a quarter of a point. This can wind up affecting the terms under which consumers can access credit or borrow money. Learn how you might be impacted by the rate hike.

Mortgages

The Federal Reserve is only one influencing factor affecting the rates of long-term fixed mortgages. At present, on average, the fixed-rate mortgage (30-year) is approximately 4.04 percent. This is just a slight uptick from its lowest rate of 3.5 percent.

Adjustable-rate mortgages (ARM) will climb accordingly, causing monthly payments to likely rise with them, the chief financial analyst for Bankrate opined.

Credit cards

The majority of credit cards have variable rates. This directly correlates with the Federal Reserve's rate. While a .25 rate hike translates to an additional $2.50 per year on each $1,000 debt unit, as NerdWallet reports, collectively it will add up to nearly $1.5 billion just in additional finance charges this year.

Private student loans

Federal student loans have fixed rates, but private loan rates can be either fixed or variable. If you are carrying student loan debt that is privately financed, it might be time to shift your debt by refinancing to a fixed rate.

Be proactive about your debts

If all of this talk about debt and interest rate hikes has your head swimming while you attempt to stay on top of your bills, you might need more drastic action than simple refinancing can provide.

Before your financial situation becomes untenable, seek the counsel of an Arizona attorney who files bankruptcy cases. You can then determine whether or not this is a wise choice for you to make.

Source: CNBC, "How the Fed rate hike will affect your finances," Jessica Dickler, June 14, 2017

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