Credit card, mortgage and auto: See how much Fed interest rates have affected how much you pay

Jim Sergent

In 14 months, the Federal Reserve reshaped the lending landscape in its efforts to rein in 40-year high inflation

The nine rate increases – 10 as of Wednesday – have slowed the economy by making borrowing more expensive. At the extreme, the annual percentage rate on a new credit card has jumped from just over 16% to nearly 24%.

But it not just credit cards, the rate increases are affecting all kinds of lending as well as purchases.

From fewer home sales to falling prices for televisions and used cars, several indicators are flashing that the interest rate increases are slowing the economy as well as inflation. However, economists say we likely still haven't seen the full impact: Rate increases can take a year to ripple through a financial system.

The Federal Reserve's policymaking committee raised the federal funds rate another 0.25 percentage points Wednesday, potentially making borrowing even more expensive. Only the prime lending rate – the rate consumers with the best credit pay on loans from commercial banks – will shift within hours of the fed funds rate decision.

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How much prime rate, credit cards have risen since the Fed started raising rates

How much more are you paying on credit card balances?

As the prime rate has risen to 8% (8.25% as of Wednesday evening), the average credit card interest rate has risen from 16.2% in January 2022 to 23.8% last week, according to LendingTree. On $7,000 credit card balance, that's raised monthly interest charges to $138, a $44 increase.

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What are current mortgage rates?

Fed Chairman Jerome Powell has said frequently that consumers shouldn't expect a reduction in interest rates soon. Many economists and investors are predicting that the Federal Reserve's policymaking committee will either suspend its series of rate increases on Wednesday or at its June meeting

Regardless, home buyers could struggle with steeper mortgage costs driven largely by the rate increases. Home sales have fallen from a seasonally adjusted annual rate of 6.5 million in January 2022 to 4.44 million in March 2023. 

The median U.S. home sold for about $450,000 in 2022, according to the Census Bureau. In the past year, Freddie Mac's reported 30-year mortgage rates have risen from 3.6% to 6.4%. That would raise the monthly payment on a new $450,000 mortgage – assuming a $90,000 down payment – by 31% or about $615, according to a Bankrate calculator