What it Means to Have a Fixed Rate Loan
The Federal Reserve, also known as the Fed, raised the prime interest rate by 0.25% on December 16, 2015. It is the first time the Fed raised the prime interest rate since 2006. Often, this kind of news can blur into the background, especially for young people who haven’t been through an interest rate hike during their adult lives. For those who are a little older, you may not have been in a financial position to care very much 10 years ago, but now you’d like to know what’s going on. Even if you’re among those readers who are old enough to have lived through several cycles of Fed rate changes, you might want a refresher since it has been a while.
The new prime rate affects you in a few ways. Any loan you have that is not a fixed rate loan will go up. Credit cards, auto loans and many mortgages will have a higher interest rate than they did before, which means the amount you’ll pay in interest every month will go up. Fixed rate loans will remain unchanged, which is why it’s a good idea to get as much of your debt out of adjustable rate loans and into low fixed-rate loans, like a home equity loan or fixed-rate first mortgage. Check out our fixed rate Visa credit card with rates as low as 8.99% or if you have questions about your mortgage rate, call our mortgage team at (888) 328-8677 ext. 505.