What the Fed interest rate hike may mean for your credit cards

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With the Federal Reserve’s announcement of a .5 percent interest rate hike Wednesday, rates for short-term borrowing could follow suit.

"Credit card rates are not necessarily tied directly to the Fed rate that’s being raised, but lending institutions oftentimes like to make a tie into how their interest rate is created in relationship to the Fed funds rate," Barry Bigelow with Great Waters Financial said.

Bigelow said it won’t be automatic, but it is important for borrowers to be aware of as they spend now and look at the balance on a card.

"The credit card company can raise the rate on the existing debt," he said. "It’s a variable rate credit card, it’s short-term debt, so you can take more money out and use it if you want to, and they can raise the interest rate if they want to."

However, Bigelow said you won’t be caught off guard by a higher interest rate on a credit card.

"They have to give you a 45-day notice before the rate change goes into effect, so you should know ahead of time that that rate is changing and have time to shop your card, pay off the balance, before anything changes," he said.

He also suggested that if you’ve been putting off refinancing a mortgage, this is your sign to do it before another impending rate hike later this year.