What a Fed rate hike means for your wallet

The quarter-point increase in the federal fund rate by the Federal Reserve Board likely will change some of the terms by which you borrow money or access credit.

“As long as the economy continues to progress, we will see more from the Fed and the cumulative effect is really meaningful,” said Greg McBride, Bankrate.com’s chief financial analyst.

If you’re concerned about what this means for your own bank account, mortgage loan or credit card, here’s a breakdown of what may happen.

The economy, the Fed and inflation all have some influence over long-term fixed mortgage rates , which generally are pegged to yields on U.S. Treasury notes, so there’s already been some creep up from record-low levels since the election and well before the Fed made an official move.

With interest rates rising, adjustable rate mortgages will certainly be heading higher too and those with an ARM “are a sitting duck for a big increase,” McBride said.

One option to consider is refinancing.

“There is no sense in bearing the risk of an adjustable rate when you can lock in a fixed-rate and essentially the same level,” he said. The average 30-year fixed rate mortgage is about 4.15 percent — not all that far off from the record low of 3.50 percent.

Many homeowners with adjustable rate home equity lines of credit , which are pegged to the prime rate, will also be affected. But unlike an adjustable rate mortgage, these loans adjust immediately rather than once a year.

For example, a rate increase of 25 basis points would cause borrowers with a $50,000 HELOC to see a $10 to $11 increase in their next monthly payment, according to Mike Kinane, a senior vice president of consumer lending at TD Bank. While that’s not a big change, those worried about the escalation of rates can often convert the balance into a fixed-rate option at any time, Kinane said.

For those planning on purchasing a new car in the next few months, one rate change likely will not have any material effect on what rate you get. A quarter percentage point difference on…