federal reserve

7 ways the Fed's decisions on interest rates affect you

Touching home equity lines
Touching home equity lines | Caiaimage/Martin Barraud/Getty Images

Touching home equity lines

Your home equity line of credit, or HELOC, is linked to the prime rate. When the Fed raises its target rate, HELOC rates follow.

Because credit card interest rates will go up, too, it still could be to your advantage to consolidate credit card debt into a lower-rate HELOC if you have the self-discipline to pay off the debt as quickly as you can.

The sooner you pay off variable-rate debt, the better, because many investors and economists expect the Fed to keep increasing the federal funds rate. Jonathan Smoke, chief economist for Realtor.com, says he expects at least two Fed hikes in 2017 -- one in the middle of the year and one toward the end.

The Fed will be constrained by the effects of higher rates on the value of the dollar. A stronger dollar could weaken global economic growth, which eventually could rebound to the United States.

RATE SEARCH: Time for home improvements? Compare offers for home equity lines.

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