Why the Fed raised interest rates and what it means for credit cards, mortgages and savers

Many Americans, coping with the high cost of living, are increasingly relying on credit cards to help maintain their spending - (Getty Images)

The Federal Reserve has increased borrowing costs, creating a tougher climate for borrowers while offering better returns to savers.

The central bank lifted its key interest rate by a quarter-point Wednesday, marking its first increase since the summer of 2023. This adjustment is expected to raise financing rates for mortgages, vehicles and consumer loans. However, those setting money aside will likely see higher yields on their savings.