Attempting to deflate inflation, the Fed hiked rates for the third time in a row and predicted an aggressive trajectory moving forward. Ouch. But Toni, the federal funds rate is the interest rate at which banks borrow and lend to each other, not everyday citizens. The Fed rate hike shouldn’t have anything to do with me! You’d think so, right?

Unfortunately, “fixing” inflation is not as simple as just putting the numbers back down. Higher federal rates slow inflation by decreasing consumer demand. This hike—or rather, series of hikes—moves down the economic food chain to the individual level, AKA you. Theoretically, if fewer people are buying new houses or cars or Hocus Pocus x Crocs clogs, prices should come down. 

However, banks will raise rates for their respective customers, and businesses may still raise prices to help pay anything they owe to their banks. Are Fed Chairman Jerome Powell’s “forceful and rapid steps to moderate demand” too much, too late? How will this rate hike affect your wallet?

1. Credit card rates will rise

As most credit cards have a variable rate, interest charges will increase in conjunction with this new rate hike. A recent analysis estimates this hike will cost consumers an additional $5.3 billion this year. While luxury cards might not be in the, well, cards, consider shopping around for a 0% balance transfer credit card.

2. Auto loans will be more expensive

Although auto loans are fixed, interest rates and price tags are growing. Figure out how much you can afford to spend on a car, while considering that you’ll probably be pushed to the end of your budgetary comfort zone.

3. Mortgage rates are already high

When the Fed raises interest rates, the prime rate—the index for many credit cards, home equity lines of credit, and auto loans—also rises. Therefore, nearly all methods of financing a house are expensive. First-time homebuyers should carefully consider their mortgage options and all buyers should invest properly for a down payment.

4. For student loans, it depends

Existing variable rate private student loan rates will rise, along with new federal student loans taken out for the 2022-23 school year. So, should you consolidate your student loans?

Smart MNE’s smartest top tip? Pay down high-interest debt now. Like, right now. Also, take a moment to reevaluate your investing strategies amidst rising rates.