Your Christmas gift from the Federal Reserve is here. Surprise! It’s another 0.25% hike in the Federal Funds rate. Sure, you’ve already gotten this same gift three other times in 2018, and nine times since late 2015 – but what else would you expect to receive from the Fed?
Interest rate hikes from the Fed really can be a positive gift to you, but it’s more likely to be a negative – depending on whether you’re a saver or a spender.
The Federal Funds rate is the benchmark rate used to transfer money between banks. This rate is generally passed on to consumers. Borrowers are charged higher interest rates on the money they borrow, while savers are eventually offered better interest rates on checking and savings accounts as well as certificates of deposit (CDs).
In some cases, the changes are passed on directly to consumers. For example, credit cards and adjust…