Your Money: Navigating Rising Interest Rates

November 07, 2023

Interest rates have remained at historic lows for years, making it a great time to borrow money. However, in an effort to slow inflation, the Federal Reserve has raised rates 11 times since March 2022.

Why does the Fed raise rates?

Keeping the economy on an even keel is always a delicate balancing act. When it's humming along with strong growth, it can become too much of a good thing resulting in inflation. By raising its federal funds rate, the Fed seeks to slow growth and keep inflation in check. In turn, the cost of credit goes up consumers and businesses pay more to borrow money, and then react by cutting back on their spending until conditions improve. Here are ways you can manage your money in a rising-rate environment.

Investing: Keep a Long-Term View

Typically, when the Fed reduces rates, the stock market goes up and when it raises them, it goes down The Fed's recent decision to raise interest rates in March caused a stock market rally instead of a negative reaction, although the rally was short lived. Market volatility is most likely to continue, as investors react to rate increases and a variety of other major news and events including the Ukraine conflict, rising gasoline prices and the upcoming mid-term elections.

Uncertainty worries investors and they can react out of fear. But having a diversified investment mix can help you weather the storms. Keep a long-term perspective and review your asset allocation annually or whenever there are changes to your individual investment assumptions.

Loan or Credit Card Debt

When the federal fund rate increases, the interest rate on variable rate loans and credit cards will also increase. This makes borrowing money more expensive. That's why it's a good time to attack your debt and pay off as much as you can. SchoolsFirst FCU may be able to help you save money on existing loans or credit cards, or help you consolidate debt. Call us or visit a branch near you so we can review your situation.


Many people want to buy a home, but worry about rising rates and if they can still get a competitive mortgage loan. The truth is, rates are still low and moving so gradually that it's a good time to buy. If you're a homeowner with an adjustable rate mortgage, or ARM, you may want to refinance and get a fixed-rate loan, so you can budget for a steady payment. SchoolsFirst FCU offers ARM products with a starting interest rate that is set for five or seven years and adjusts up or down once every year or five years depending on the loan program. SchoolsFirst FCU also offers fixed rate mortgages. Talk to one of our loan consultants to find the right solution for you.


Interest rates on traditional savings accounts have been low for a while now. And even with a rate hike, you may not see much of an increase in what you can earn on your money. That's because there is no direct relationship between the interest rates on savings accounts and the federal funds rate. Still, it pays to shop around; some online banks offer higher interest rates. If you're looking for a way to maximize your savings, a SchoolsFirst Share Certificate may be right for you because Share Certificates offer higher dividend rates than regular savings accounts. Learn more.

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