Fed Hikes Interest Rates for 1st Time in 7 Years

The rates increased from 0 to 0.25%, bumping rates for homes, cars and credit cards.
1:58 | 12/17/15

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Transcript for Fed Hikes Interest Rates for 1st Time in 7 Years
Of course, the democrats duel next and we hope you'll join Martha Raddatz and me when we moderate the New Hampshire democratic debate, this Saturday, December 19th, 8:00 P.M., 7:00 central. In the meantime, we turn to the economy tonight, and to a major development. The federal reserve raising interest rates for the first time in nearly a decade. The first rate hike since the financial collapse. Sending Wall Street song, closing up more than 220 points. But many Americans asking tonight, what does this now mean for car loans, credit cards, mortgages? ABC's chief economics correspondent Rebecca Jarvis with what you should do tonight. Reporter: Tonight, for the first time, the federal reserve is hiking interest rates from zero to one-quarter of a percent. How confident are you that our economy won't slip back into recession? The underlying health of the U.S. Economy, I consider to be quite sound. Reporter: So, what exactly does this mean for you? Everything from your credit cards, to new car loans or mortgages, will be a little more expensive. The increase should be gradual. Still, for new mortgages, small changes can actually have a big impact. On a $200,000 house, a fixed rate mortgage at 4% will cost you $955 a month. But if the rate rises just one quarter of a percent, that payment rises to $984, costing you $11,000 more over the life of the 30-year loan. Car loans also getting pricier. But the very first thing you'll likely notice? Most of us have credit cards with variable rates, which means an increase within one to two billing cycles. And Rebecca Jarvis live from the fed tonight. And Rebecca, some banks are already taking action tonight? Reporter: David, almost immediately, bank of America and Wells Fargo came out and said, they will be charging borrowers more for the cost of their loans, but there is a silver lining for savers who will earn a little bit more on those cds and money market accounts going forward, David.

This transcript has been automatically generated and may not be 100% accurate.

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