, prime or T-bill rates — which means that as the Fed raises rates, borrowers will likely pay more in interest, although how much more will vary by the benchmark.refinancing"If you have private loans, nothing should stop you from refinancing if you find a lower rate," said higher education expert Mark Kantrowitz."You just want to be careful not to refinance into a variable rate because those have nowhere to go but up.
While the Fed has no direct influence on deposit rates; they tend to be correlated to changes in the target federal funds rate. As a result,has been hovering near rock bottom, currently a mere 0.06%, on average. However, because the inflation rate is now much higher than this, any money in savings loses purchasing power over time."Banks are very sluggish to raise rates," said Yiming Ma, an assistant finance professor at Columbia University Business School.
Look for other options with better rates, McBride advised."Where you have your money parked will make all the difference." Thanks, in part, to lower overhead expenses, the average online savings account rate, which is currently near 0.5%, is considerably higher than the average rate from a traditional, brick-and-mortar bank, according to Ken Tumin, the founder of DepositAccounts.com.