SACRAMENTO, Calif. (KTXL) — What does the Fed’s interest rates hike mean for the public? Bottom line, it’s expected it will get more expensive to borrow money — whether it’s credit cards or a mortgage.

For those debating a summer splurge versus paying off a credit card, financial advisors recommend treating yourself to less debt.

“If you have variable debt such as credit cards adjustable rate mortgages, and loans that are based on a variable rate, you should pay that off as soon as possible because those rates are going to go up,” Financial advisor David Chang said.

The Federal Reserve announced a .75% interest rate increase. It’s the largest in nearly 30 years. They’re hoping it solves a problem that’s at a 40-year high: inflation. 

“We are going to see things become little bit more expensive in the short term, but shorter pain is for long-term gain,” 

At least that’s the goal. The Fed is betting the higher interest rates will make consumers less likely to borrow and spend money, in other words lowering demand. With demand back in line with supply, prices should theoretically come down as well. 

In the meantime, the average person may see some benefits

“If you are saving you may see a benefit because you will probably see more interest from your savings account. If you have a fixed mortgage you got two years ago, you’re probably in good shape as long as you don’t refinance,” 

It remains to be seen how much of an effect the interest rate hike will have on mortgage rates and Sacramento’s housing market. 

More modest interest rate increases earlier this year have limited buyers’ spending power, Erin Stumpf, president of the Sacramento Realtor’s Association, said.

“At least at this point, it hasn’t seemed to demotivate any buyers. If anything, many buyers are motivated to get into a home while the rates are still good,” Stumpf said.

Stumpf said the last two years of a fast-paced housing market that heavily favored sellers have created an imbalance. It’s one she said the fed hike could even out.

“I think there’s going to be a shift, but I think it’s going to end up in an equitable place between buyers and sellers,” Stumpf said.