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The Federal Reserve System Experts predict it is likely to temporarily suspend aggressive rate hikes at its meeting next week. However, consumers may not see any relief.

Central Bank raised interest rates 10 times since last year – the fastest pace of tightening since the early 1980s – only to keep inflation well above its 2% target.

“We live in uncharted territory,” said Charlie Wise, senior vice president and head of global research and consulting at TransUnion. “The combination of rising interest rates and increased inflation, while not historically unusual, is an unfamiliar experience for many consumers.”

“A break won’t make things better,” he added.

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Although the Fed’s rate hike cycle has begun to cool inflation, higher prices caused real wages to fall. That’s messed up household budgetswhich pushes more people into debt just as borrowing rates hit record highs.

Despite the pause, “interest rates are the highest they’ve been in years, the cost of borrowing has risen dramatically, and that’s not going to change,” said Greg McBride, chief financial analyst at Bankrate.com.

Here’s a breakdown of how the benchmark rate has already affected the rates consumers pay:

Top 20% Credit Card Rates

The federal funds rate, set by the US central bank, is the interest rate at which banks borrow and lend overnight. Although it’s not the rate consumers pay, the Fed’s actions still affect the loan and savings rates they see every day.

Most for starters Credit Cards come up with a variable rate that has direct link to the Fed benchmark rate.

After previous rate hikes, the average credit card rate is now more than 20% — historical highwhile the balances are higher and nearly half of credit card holders carry month-to-month debt, according to a Bank account report.

Mortgage rates close to 7%

Although 15-year and 30-year mortgage rates are fixed and tied to Treasury yields and the economy, anyone buying a new home has lost significant purchasing power, in part due to inflation and the Fed’s policy actions.

The average rate for a 30-year fixed-rate mortgage is currently 6.9%, according to Bankrate, up from 5.27% a year ago and just slightly below the October high of 7.12%.

Adjustable rate mortgagesor ARMs and home equity lines of credit, or HELOCs, are tied to the prime rate. As the federal funds rate rose, so did the prime rate, and those rates followed suit.

Now, the average rate for a HELOC is up to 8.3%, a 22-year high, according to Bankrate. “While it’s typically thought of as a cheap way to borrow, that’s no longer the case,” McBride said.

Car loan rates close to 7%

Although car loans are fixed, payments increase as the price of all cars rises along with interest rates on new loans.

The average five-year new car loan rate is now 6.87%, the highest since 2010, according to Bankrate.

Keeping up with higher costs has become a challenge, research showswith more borrowers falling behind on their monthly loan payments.

Federal student loans to rise to 5.5%

Federal student loan rates they are also fixed, so most borrowers are not immediately affected by the Fed’s actions. But starting in July, college students who take out new direct federal student loans will see interest rates increase to 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.

Right now, anyone with existing federal education debt will benefit from 0% rates until the payment freeze ends, which the U.S. Department of Education says could happen. autumn.

Private student loans tend to have a variable rate tied to Libor, prime or treasury bills – and that means those borrowers are already paying more in interest. However, how much more varies by benchmark.

Deposit rates at some banks are up to 5%

While the Fed has no direct influence on deposit rates, yields tend to correlate with changes in the target federal funds rate. The savings account rates at some of the biggest retail bankswhich were near the bottom most of the time the Covid pandemicthey are currently up to 0.4% on average.

Thanks in part to lower overhead costs, rates on the highest-yielding online savings accounts are now over 5%, the highest since the 2008 financial crisis, according to Bankrate.

But if the Fed skips a rate hike at its June meeting, then those deposit rate hikes are likely to slow, according to Ken Tumin, founder of DepositAccounts.com.

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