TALLAHASSEE, Fla. (WTXL) — Financial experts say this will put us on the slow road to stability. But that road could get bumpy along the way for hardworking Americans.
"I'm going to owe even more, and I'm going to keep owing more and if I don't pay this off quicker, I'm going to be in so much debt."
Joel lives in Tallahassee and says at one point he had over 10,000 dollars in debt. Thoughts of rising interest rates.
"It would make me like panic."
Tuesday, the Federal Reserve increased interest rates by a quarter of a percent; putting target interest rates in the 0.25 to 0.50 percent range. The reason?
"We need to slow down inflation."
Dr. Tom Smythe is a Professor of Finance at Florida Gulf Coast University. He says credit card interest rates will see the biggest jump right away.
"It's not going to hit the mortgage and auto loan market hard right now, it'll have more of an impact by the end of the year after a number of rate hikes occur."
Student loan rates will also be targeted over the long-term. Luckily, if you already have one of these big-ticket items, chances are your rates are already locked in, and won't change.
"What they're doing now is doing nothing to make people think the inflation rate is going to be lower in the future."
Dr. James Gwartney is an Economics Professor at Florida State University. He says the Fed should aim to raise interest rates even more. Something Smythe agrees with, but both warn it comes at a risk of unsettling the market.
"We simply may not have a choice depending on how inflation continues to progress in the next 2 to 3 months."
Leaving people like Joel to make some tough choices going ahead.
"I would feel stuck, I would feel lost."
The Fed is expected to raise interest rates to 1.9 percent by the end of 2022. However, the Russia and Ukraine situation could play a big part in potentially affecting those rates in the coming months.
For people investing in a savings account, the interest rate hikes will be a good thing, as return rates will likely to go up over the coming months.