With two 2017 rate hikes on the books and another expected by the end of the year, how much does the American public know about Federal Reserve policy?
According to a new survey from WalletHub, 44% of Americans don’t know when the Fed last raised rates. (In June, the Federal Reserve raised rates 25 basis points to a range of 1% to 1.25%, as expected, and indicated there would be one more rate hike this year.)
“The Federal Reserve’s four rate hikes since Dec. 2015 will cost credit card users an extra $6 billion in interest this year alone,” according to WalletHub, a site that offers credit scores and reports. “In short, debt becomes more expensive when the Fed raises rates, making it harder to pay our bills on time and threatening our credit scores. And when credit scores fall, our costs rise even more, resulting in a downward spiral.”
Given the impact that Fed rate hikes can have on a person’s finances, WalletHub wanted to see just how much the general public knows about the Fed and how its policies affect them. Its Fed Rate Hike Survey results are based on a nationally representative survey of 1,000 individuals conducted by WalletHub from June 26 to July 3.
According to the survey, two-thirds of Americans think the Federal Reserve system needs some work, and 14% say “we should get rid of it altogether.”
Of the people surveyed, 42% say the Fed should consider consumers’ credit scores when making rate-hike decisions. According to WalletHub, the national average credit score is 669. Interestingly, 16% of the people surveyed think the Fed is in charge of credit scores. The survey also finds that 22% of people surveyed think rate hikes hurt their credit score, and 7% think they help.
And, asked whether rate hikes are good or bad for the economy, less than one third (30%) responded that rate hikes are good for the economy. Meanwhile, 36% think rate hikes are bad for the economy and 34% “don’t know.” Most consumers (56%) think rate hikes are bad for their wallet overall, while 18% think rate hikes are good and 26% “don’t know.”
Half of Americans surveyed think rate hikes make mortgages more expensive, according to the survey. However, 90% of mortgages have fixed rates. Only 10% of people have variable-rate mortgages, according to WalletHub.
The survey also finds that 60% of people surveyed think their credit card rates are too high already.
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