by Rommel Conclara, ABS-CBN News
SAN FRANCISCO — A rebound in oil prices helped US stocks open higher Wednesday, ahead of a widely expected interest rate hike by the US Federal Reserve.
Interest rates were at zero percent in 2008 to help the country recover during the Great Recession.
However, since the US is continuing to add jobs and wage growth continues — the Fed can afford higher interest rates.
Meanwhile in San Francisco, financial accountant Geth Ear and tax accountant Anna Diokno discuss what consumers need to know regarding the rate hike.
“It’s a domino effect,” said Geth. “You’re going to higher rates when you want to borrow money for a car, student loans, and all of the above. I mean it’s great for the banking industry, financial sector… but for a consumer we definitely want a lower interest rate to benefit us.”
Mortgage rates will be one area that will see a major effect of the rate hike.
“If you are looking to purchase a new home or refinance your current home, the new rates will cost you extra the fact that the prime rates are a bit higher and the banks will charge you more,” said Geth. “The current interest rate right now is around 4.5 percent — prior to that it was 3.5 at a 30-year fix, so I believe the fed raising the interest rate will affect the consumers.”
Credit card interest will also go up from the Fed’s increase.
Diokno insists that people pay on time, pay more that what is due, and if you have to open a credit card make sure you take advantage of a zero percent introductory APR.
“If you have multiple credit cards, plan on paying the credit card with the highest interest rate first or consider transferring the balance of a credit card with the highest interest rate to a credit card with a lower interest rate,” said Diokno.
Diokno also suggest that you call your credit card company to lower your interest rate.
“They will lower your rate because they want to stay competitive and they want to keep you as a customer, so this only works when you are a good customer…. you’ve been a customer for a long time,” said Diokno. “You pay your bills on time. It’s amazing what they will do to keep you as a customer.”
Rates were raised once in 2015 and 2016, and leaders project they’ll increase rates three times this year, while they are still historically low.