FAYETTEVILLE, Ark. (KNWA/KFTA) — Borrowing could become more expensive after the Federal Reserve raised interest rates by 0.5%.
Economist at the University of Arkansas Jeff Cooperstein said the rate hike is aimed at lowering inflation.
“It’s going to be more expensive to borrow for various things for both individuals and for businesses, but it should also ease price pressure,” Cooperstein said.
The higher interest rate could make loans and credit card debt more expensive. Cooperstein said you’ll want to look at your credit card spending closely.
“Look at how they’re using credit cards and do what every financial counselor says, pay your credit card bill monthly whenever you can, and try not to roll up credit card debts, the more you can pay down, pay it off every month,” Cooperstein said.
Senior Vice President of Mortgage Lending at Arvest Bank, Maria Lau, said the hike will have the biggest impact on loans that have variable interest debt.
“Check and see what the terms to that are and make certain that it’s not an adjustable rate,” Lau said.
Cooperstein said although the cost of borrowing will rise with higher interest rates, it should help lower the cost of goods in the long run.
“It’s important for people to recognize that the Fed is actively engaging in policies to fight inflation,” Cooperstein said.
Th Fed could raise rates even more if needed to help fight inflation.