How the Fed Rate Increase Affects Your Mortgage, Car Loan and Credit Card Bill<br />So mortgage rates, which have hovered below 4 percent for much of 2017, are less sensitive to incremental rate increases than<br />to changes in the yield of the 10 year U. S. Treasury note, which stayed low this year even as the Fed rate ticked up.<br />After a quarter-point increase in the Fed’s rate, each household can expect to pay an<br />average of $919 a year in credit card interest, up from $904, according to the study.<br />Consumer groups suggest that debtors who cannot pay off their monthly credit card balances transfer the debt onto a card<br />that does not charge interest for several months, and then clear the amount owed before the card switches to a variable rate.<br />Students who already have a fixed-rate government loan will not see a change,<br />but the interest rates on private variable-rate loans will probably rise because of the Fed’s action.<br />Anyone with a credit card will see a small but instant shock to their interest rate,<br />followed by borrowers with student and auto loans and, eventually, mortgage holders.<br />This could cause payments to balloon, because credit cards tend to compound interest, requiring<br />consumers to pay interest on their base balance and on the accrued interest.<br />At the Fed’s final meeting of the year, and the last one for Janet L. Yellen, its chairwoman, the board of governors<br />set the target federal funds rate between 1.25 percent and 1.5 percent, a quarter-point increase.
