How Rising Interest Rates Can Affect You

Higher interest rates make it harder for families and businesses to borrow money. The Federal Reserve’s moves to try to balance inflation and interest rates have a big influence on your wallet.

Several IOUs stick out of the top of a piggy bank.
(Image credit: Getty Images)

The Federal Reserve has now raised the benchmark interest rate 11 times since March 2022, including its 0.25% increase on Wednesday. When the interest rate changes, there are real-world effects on how both businesses and consumers make purchases. To understand how interest rates affect your personal finances, you need to understand exactly how they work.

What is an interest rate?

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Tony Drake, CFP®, Investment Advisor Representative
Founder & CEO, Drake and Associates

Tony Drake is a CERTIFIED FINANCIAL PLANNER™ and the founder and CEO of Drake & Associates in Waukesha, Wis. Tony is an Investment Adviser Representative and has helped clients prepare for retirement for more than a decade. He hosts The Retirement Ready Radio Show on WTMJ Radio each week and is featured regularly on TV stations in Milwaukee. Tony is passionate about building strong relationships with his clients so he can help them build a strong plan for their retirement.