One number. Eight times a year. Mortgages, savings, stocks, credit cards — all touched by it.
The rate banks charge each other for overnight loans. The Fed nudges it up or down to cool or warm the economy.
When the Fed raises rates, 30-year mortgages typically follow. A 1% jump can add hundreds to a monthly payment.
Most credit card APRs are tied to the prime rate. When the Fed hikes, your card's rate rises within one or two billing cycles.
Higher Fed rates lift high-yield savings APYs and CD yields. After a decade of near-zero rates, cash actually pays again.
Higher rates make future earnings worth less today. Growth stocks tend to fall on hikes; value stocks often hold up better.
2%
The Fed aims for ~2% inflation. When it runs hotter, hikes follow. When the economy cools, cuts follow.
Pay down variable-rate debt. Lock in fixed mortgage rates if buying. Park savings in high-yield accounts. Diversify.
How the Fed's rate decisions reach your wallet — explained without jargon.
Educational content only. Not financial advice.