How the federal interest rate hike may impact Arizonans

A credit union CFO is recommending Arizonans quickly pay off as much debt as possible and save at least six months worth of cash following the hike.
Published: Jun. 15, 2022 at 10:34 PM MST
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PHOENIX (3TV/CBS 5) - Interest rates have been very low here in the United States for a long time. But today, the Federal Reserve raised interest rates by .75%. That’s the largest increase by the reserve in a single meeting since 1994. “Larger than we were expecting a week ago,” TruWest Credit Union CFO Mike Ward said.

Ward anticipated that the Federal Reserve would raise interest rates. But by raising them three-quarters of a percent instead of half a percent, he sees many Arizonans in for a rude awakening the next time they check their bank statement. “Depending on what your debt level is, that can be significant,” Ward said. “That can be $200-$300 to an individual.”

Ward recommends quickly paying off as much debt as possible on variable rate products like credit cards and saving at least six months’ worth of cash for day-to-day purchases. While Ward says spending less on non-essential expenses can help offset some of the money lost due to higher interest rates, Valley real estate agent Kristin Graziano says that approach doesn’t necessarily apply to buying a home in this market.

“A lot of times when people are fearful of the market and what’s happening, you have less competition,” she said. “So it’s actually a really good time to jump in and buy a house.”

On the other hand, when it comes to selling a home, Graziano says a little patience with rising rates can go a long way towards getting the most bang for your buck. “If someone is thinking of selling and they don’t need to do it right now, I would probably wait to do it until the spring,” she said.

This sharp rise in interest rates is likely only the latest step in a steady long-term increase by the federal reserve. Both Graziano and Ward say it’s important for Arizonans to take that into account for future finances. “With today’s rate hike, what they could afford yesterday is different what they could afford for tomorrow,” Graziano said.

“By the end of the year, they could see upwards of four percent additional interest rate costs associated with their debt,” Ward added.

The rates could change again as early as next month.