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Buying a car? A home? Fed rate hike shouldn’t matter much

Federal Reserve Chair Janet Yellen's Washington news conference is shown on a television screen on the floor of the New York Stock Exchange, Wednesday, Dec. 16, 2015. The Fed's move to lift its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent ends an extraordinary seven-year period of near-zero rates that began at the depths of the 2008 financial crisis. (AP Photo/Richard Drew)
Federal Reserve Chair Janet Yellen's Washington news conference is shown on a television screen on the floor of the New York Stock Exchange, Wednesday, Dec. 16, 2015. The Fed's move to lift its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent ends an extraordinary seven-year period of near-zero rates that began at the depths of the 2008 financial crisis. (AP Photo/Richard Drew) Federal Reserve Chair Janet Yellen's Washington news conference is shown on a television screen on the floor of the New York Stock Exchange, Wednesday, Dec. 16, 2015. The Fed's move to lift its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent ends an extraordinary seven-year period of near-zero rates that began at the depths of the 2008 financial crisis. (AP Photo/Richard Drew)

By Associated Press 5 min read

For anyone considering whether to buy a home or car, the Federal Reserve’s interest rate increase Wednesday shouldn’t make much difference.

The rates that most people pay for mortgages, auto loans or college tuition aren’t expected to jump anytime soon. The Fed’s benchmark interest rate has limited influence on those things.

Still, the Fed’s move to lift its key rate by a quarter-percentage point will raise short-term borrowing costs for banks. And that, in turn, is intended to prod banks to boost certain other rates. Rates on credit cards and home equity loans and credit lines, for example, will most likely rise, though probably only slightly.

The rate the Fed controls is only one factor among many that can influence longer-term borrowing costs. And the Fed made clear it will assess the economy’s health before raising rates further.

“Loans that are linked to longer-term interest rates are unlikely to move very much,” Fed Chair Janet Yellen said at a news conference. “Credit card rates … might move up slightly. But remember, we have very low rates, and we’ve made a very small move.”