On The Come Up | themoneydean.com

A SPECIAL ISSUE OF ON THE COME UP

A 15-Minute Course on the Fed

(and Your Wallet)

The Federal Reserve just raised interest rates for the first time in more than three years.

Here is who the Fed is, what it does, and exactly which of your bills move next — in plain language.

If you've never been quite sure who "the Fed" is, what it actually does, or why one committee's vote changes what you pay on a credit card in Detroit or a car note in New Orleans, this short

course is for you. No jargon. Just the mechanics.

Part 1: Who the Fed Is (the 90-Second Version)

The Federal Reserve is the central bank of the United States. It is not the Treasury Department, it does not print your tax refund, and it is not a regular bank you can walk into. Congress created it in 1913 and

gave it two jobs, called the "dual mandate":

1. Keep prices stable (control inflation)

2. Keep employment as high as sustainably possible

Quick vocabulary before we go further. "Prices" here means the everyday cost of living — groceries, rent, gas, insurance — and inflation is those prices rising across the board, so every dollar you hold buys a little less. "Cheap money" means interest rates are low, so borrowing costs little and loans are easy to get. "Expensive money" means rates are high, so borrowing costs more and people and businesses think twice before taking on debt.

Those two goals fight each other constantly. Cheap money helps hiring but can overheat prices.

Expensive money cools prices but can cost jobs. The Fed's entire existence is managing that tension.

The decisions get made by a group called the FOMC — the Federal Open Market Committee. It meets eight times a year, and its main tool is one number: the federal funds rate. That's the interest rate banks charge each other to borrow money overnight. It sounds obscure, but it is the base price of money in

America. Nearly every rate you pay or earn is built on top of it.

DEAN themoneydean.com

Part 2: What Just Happened

On September 16, the FOMC voted unanimously to raise the federal funds rate by a quarter of a percentage point, to a target range of 3.75% to 4.00%. That is the first rate increase since July 2023.

Why raise now? Inflation. The cost of everyday goods and services has been rising at roughly 3.4% a year — well above the Fed's 2% target — and the Fed's own projections don't see that fixing itself quickly. When inflation won't come down on its own, the Fed makes borrowing more expensive across the whole economy. Expensive borrowing means less spending, and less spending takes pressure off prices. That's the theory, and historically it works — it just works slowly and it isn't painless.

One more thing to know: the committee's published projections show most members expect at least one more quarter-point hike before the end of the year, and markets are pricing that in. So this is probably not a one-time event. Plan like rates are going up, not like this was a blip.

Part 3: How One Rate Becomes YOUR Rate

Here's the chain, and it's worth understanding because it tells you which of your bills move and how fast.

Step one: the Fed raises the federal funds rate.

Step two: banks immediately raise the "prime rate" — the rate they charge their most creditworthy customers. Prime almost always sits about 3 percentage points above the fed funds rate. The day after this hike, major banks moved prime from 6.75% to 7.00%. That happened within 24 hours.

Step three: anything priced off prime follows. Credit cards, HELOCs, and many variable-rate personal and business loans are literally written as "prime plus a margin." When prime moves, your rate moves— usually within one or two billing cycles.

Step four: everything else adjusts based on expectations, not the hike itself. This is the part most people miss, and it's where Treasuries come in.

Part 4: Treasuries — the Rate Behind the Rates

The U.S. government borrows money by selling Treasury bonds. When you hear the word "yield," that's simply the annual return an investor earns for lending money to the government — if a Treasury yields 5%, you get $5 a year for every $100 you lend. The yield on the 10-year Treasury note is arguably the most important number in consumer finance, because long-term loans — especially mortgages — are priced off it, not off the Fed's rate.

Why? Because when a lender gives you a 30-year mortgage, they're competing with the option of just lending that money to the U.S. government instead. The government is the safest borrower on earth. So your mortgage rate is roughly the 10-year Treasury yield plus a premium for the extra risk and hassle of lending to a regular human.E MONEY DEAN themoneydean.com

Here's the crucial mechanic: Treasury yields move on expectations. Investors saw this hike coming weeks ago and priced it in before the vote. That's why the 10-year yield climbed toward 5% — its highest territory in nearly two decades — before the announcement, and barely moved after. The 30-year fixed mortgage sat near 7% this week, and that number already reflected the hike.

Research from the Federal Reserve Bank of Dallas puts numbers on this: mortgage rates track the 10-year Treasury far more closely than they track the fed funds rate. So when you hear "the Fed raised rates," don't assume mortgages jump a quarter point the next morning. Mortgages follow where investors think rates and inflation are headed over the next decade. If markets expect more hikes and sticky inflation, mortgage rates drift up. If inflation breaks and cuts come into view, they can fall even while the Fed holds steady.

Part 5: What Theoretically Happens to Your Rates Now

Rate by rate, fastest to slowest:

Credit cards — moves fast, moves up. Most card APRs are variable and tied to prime. Expect your APR to rise a quarter point within the next month or two. On the average balance of about $6,600 at roughly 22% APR, one hike only adds a dollar or two to a minimum payment — but that's the trap. The damage isn't the increase; it's carrying a balance at that APR at all. Card debt was an emergency before this hike. It's slightly more of one now.

HELOCs and adjustable-rate mortgages — moves fast, moves up. Variable by design. If you have a HELOC balance or an ARM approaching its adjustment date, your payment is going up. Run the new number now, not when the statement surprises you.

Fixed-rate mortgages you already have — does not move. This is the beauty of fixed debt. If you locked a mortgage in 2020 or 2021, nothing changes for you. Nearly half of all outstanding U.S. mortgages are locked at 4% or below. Those homeowners just watched borrowing costs rise for everyone else while their payment stayed frozen. Remember that lesson: in a rising-rate world, cheap fixed debt is an asset.

New mortgages — already moved, direction depends on inflation. As covered above, new mortgage pricing follows the 10-year Treasury. With more hikes expected, the theoretical path is sideways-to-up until inflation convincingly cools. Waiting six months for a better rate is a bet, not a plan.

Auto loans — drifts up. Auto rates loosely follow prime and Treasury yields. New-car loans already average around 7%, used cars over 10%, and the average monthly payment is sitting near $765. A quarter point on a $30,000 loan is only a few dollars a month — the real problem is the price of the car and the length of the loan, not this hike.

Federal student loans — frozen for existing loans. Federal student loan rates are fixed for the life of the loan, so nothing changes on what you already owe. New federal loans get their rate set once a year based on a Treasury auction each May — so future borrowers will feel this environment, but current borrowers won't.NEY DEAN themoneydean.com

Savings accounts and CDs — moves up, but only if you're in the right account. Here's the injustice of rate hikes: banks raise what they charge you within days and raise what they pay you whenever they feel like it. The national average savings rate is still around 0.38%, and big-bank checking pays essentially nothing.

High-yield savings accounts at online banks, by contrast, actually track the Fed — and newly issued CDs and Treasury bills now pay more than they did last month. If your emergency fund is earning 0.01% at a big bank during a hiking cycle, you are donating money to that bank.

The Come Up Playbook: Rate-Hike Edition

1. List every debt you have and mark each one FIXED or VARIABLE. Variable debts are the ones this hike touches.

2. Attack variable-rate debt first — credit cards above all. Every hike raises the reward for paying them off.

3. If you carry a card balance, call the issuer and ask for a lower APR, and price out a 0% balance transfer while offers still exist.

4. Do not close old cards to "simplify" — pay them down and keep the credit line open.

5. If you have an ARM or HELOC, calculate your payment at the new rate today. No surprises.

6. Move your emergency fund to a high-yield savings account this week if it isn't in one. This is a 15-minute task that pays you every month.

7. If you're saving for a near-term goal, look at CDs and Treasury bills — you're finally being paid to wait.

8. If you're house shopping, get pre-approved based on today's rates and buy the house you can afford at today's rates. Don't budget on a refinance that may never come.

9. Keep investing your 401(k) and Roth contributions on schedule. Rate cycles come and go; missed compounding never comes back.

10. Ignore anyone who tells you exactly where rates are going. The Fed's own members don't agree with each other.

The Rules, Then the Grace

The rules: variable debt is now more expensive, so kill it faster. Cash finally pays, so park it where it earns. Fixed and cheap is the goal for debt; flexible and earning is the goal for savings.

The grace: nobody times rate cycles perfectly — not you, not the banks, not the 12 people who voted. If you financed a car at a high rate or carry a balance right now, this isn't a shame letter. It's a map. Rates just told you which debt to attack first. Start there.Y DEAN themoneydean.com

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On The Come Up is for educational and informational purposes only. Nothing here is financial, investment, tax, or legal advice,and nothing here is a recommendation to buy or sell any security or financial product. I am not a registered financial advisor.

Your situation is unique — before making financial decisions, consider consulting a licensed professional who knows your full picture. All figures, rates, and product details are believed accurate at the time of writing (September 2026) but can change without notice. Verify current numbers before acting on anything you read here. © 2026 Pitre Media LLC. All rights reserved.

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Dr. Terence Pitre grew up in New Orleans as a first-generation college student, served in the U.S. Navy from enlisted sailor to commissioned officer, worked in corporate finance at Fortune 500 companies, earned a Ph.D. in Accounting from Michigan State, and now serves as dean of a business school. Along the way, he learned money lessons the hard way — the exam before the lesson. The Come Up is where he shares them: complete, practical financial guidance for people building wealth without inherited money or an inherited playbook. No hype, no shame, no surface-level advice.