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A rate hike is when a central bank raises the price banks pay to borrow money from each other overnight; that cost then passes into nearly every consumer loan in the country.
The Federal Reserve just raised that rate by a quarter of a percentage point. Credit cards, car loans, mortgages, and savings accounts are all in the path of that move.
What changes for borrowers Credit cards are where most people feel a Fed decision first. The interest rate on a revolving balance is typically indexed to the federal funds rate, which is the rate the Fed just adjusted.
Most card agreements build that indexing in explicitly, so a quarter-point hike can push the annual percentage rate, the yearly cost of carrying a balance, higher by the same amount.
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