• Interest rate

How increase in fed interest rates will affect your monthly bills

Fed has consistently increased interest rates for the 6th time on 2 November at another 75 points rise. With this move, it has totally tallied to 4% overall. As we all know, FED is taking this move to curb soaring inflation and decrease the chances to get a recession in the near future. Generally, FED’s meeting will take place every month to discuss the inflation data and money markets. This is the highest rise in the interest rates since 2008 but to a surprise, FED has signaled to change its policy ahead.

The main intention is to raising Interest rates is

Every country has a Central bank that regulates the banking system. In the USA the governing body is FED( Federal Reserve), Likewise in England, it is The Bank of England, and in India, it is RBI( Reserve Bank of India). These banks monitor the money inflow and outflow of the country and are responsible to print the money according to the need. They are also in charge to set monetary policy according to internal and global economic changes.

So, if inflation increases then regulatory banks will increase interest rates to decrease borrowing and to make spending less. This is because all the corporate banks borrow money from the central banks by paying an interest rate called the Repo rate. Repo rate will have a direct relation to interest rates

How it will affect your monthly bills


Since credit card holders are subjected to paying the overall spent amount in a month, banks charge interest for lending the short-term loan. The prime rate will also increase so as with interest rates.

So far credit card rates are near 19%, but it was at 16.34% in march 2022. And if you have the least credit score, then you gonna lose a hell lot of money in the name of interest rates.

Mortgage Loans

If we look at the Bank of America mortgage interest rates change then in march 2022, the prime rate was at 3.50% but in November 2022 it jumped to 7% the way doubling in just 7 months. Imagine if you bought a house in march then now you need to pay double what was agreed at the time of inception. The prime reason for this increase in mortgage rates is an increase in interest rates.

Student loans

will also have a huge impact on this move at the time of repaying the debt. Student loans are fixed and cannot be altered. So, the students who have taken loans before increasing interest rates will not affect miserably. But for the people who are deciding to take a loan at present will have an immense effect. For the current academic year 2022-2023, the interest to be paid is 4.99% but it was at just 3.73% in 2021-2022.


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