The Federal Reserve issued its biggest rate hike in more than 20 years Wednesday, raising rates by half a percentage point in an effort to flight inflation. The change is leaving many wondering about the impact it could have on rates for mortgages and credit cards. Tim Chen, co-founder and CEO of NerdWallet, joins Cheddar News' Closing Bell to discuss.

Closing Bell

NerdWallet CEO on Impact Fed's Interest Rate Hike Could Have on Credit Card, Mortgage Rates

It's the day after the Fed issued its biggest rate hike in more than 20 years now. As you know, the US Central Bank raised interest rates by half a percentage point to try and fight this red hot inflation. But if you're wondering about how the impact this move could have on things like mortgages and credit card rates, you're not alone joining us now to help clear it all up is tim Chen co founder and Ceo of nerdwallet and tim let's start with mortgage rates. What should current and potential homeowners know about how mortgage rates will be impacted by the Fed's move yesterday. Yeah, thanks for having me. Um So the you know, nerdwallet's mission is to provide clarity for all of life's financial decisions. So um diving right into mortgage rates, you know, the half point hike was widely expected. And so you've already seen move the 30 year fixed moved from a little over 3% at the beginning of the year to Over 5%. Currently that's largely expected to continuing to move up. So a lot of this has been priced in a lot of. We're seeing a lot of consumers rushed to lock in rates, especially during the first quarter on the purchase side. So I definitely recommend taking that course of action if you have the choice. Now are we just talking mortgages and credit cards. What about personal personal loans, perhaps student loans? Yes. So um you know anything with the variable rate is being affected right now, definitely your credit cards and personal loans, Student loans are a different story. Um student loans, uh, there's currently a forbearance program in place and so if you have a federal student loan, we definitely recommend you hang tight and not refinance that with the private student loan, they're benefiting currently from forbearance on interest payments and there may be upcoming cancelation or forgiveness for certain parts of federal student loans. So hanging tight, there is probably the best move right now. Alright now, Fed chair jerome Powell said it was not considering bigger rate hikes in the next couple of meetings. So what else should consumers know about how the Fed could impact their wallets going forward? So I would also think about the silver lining here. Your savings account probably hasn't earned very much interest over the past 10 years. But if you recall, you know 15, 20 years ago you had rates that were a couple of points. So I would definitely recommend looking at online banks. They tend to have higher high yield savings accounts rates and those should continue to climb pretty quickly as the Fed hikes rates. Now let's talk about Nerdwallet for a moment, Nerdwallet Nerdwallet reported earnings with a 97% year over year revenue increase for its credit card offering. So what do you think was the reason for this jump. Yeah, one of the big drivers is people are getting back out there and traveling and when you travel, some of those sign up bonuses associated with travel credit cards can be quite lucrative, You might be able to get a free airline ticket out of it where other benefits like free nights at hotels. So that was definitely a tailwind. But beyond that, the economy is red hot, which is one of the things causing inflation actually. So, you know, we're seeing a pretty strong consumer right now and that's driving just strong demand across the board. Now, nerdwallet did report a miss on earnings per share as well as a drop in year, over year, monthly active users. So what was the reason you think for this and what's the plan to turn this around? Yeah, so we actually guide adjusted ebitda, which we beat pretty handily earning the gap earnings per share often has one time adjustments that aren't really apples to apples. So yeah, we didn't guide there. Um and in terms of our drop in monthly unique users, you may remember the, the meme stock trading craze a year ago, so tons of people are coming to nerdwallet looking for advice on Gamestop AMC cryptocurrencies, how to open crypto wallets. That's really subsided as the market is kind of cool down and so, um you know, we faced really tough comparisons on our investing space despite that, you know, we are pretty diversified business and you know, the headwinds from back during the pandemic or the tail winds now and vice versa. So we're seeing strength in other areas awesome. Now, nerdwallet has said it has seen changing financial behaviors from its customer base as the economy comes out of the pandemic and deals with high inflation. Tell us about these changes. Yeah, so you know you're we're seeing a big shift in the broader economy from uh you know when people are hunkering down we saw something like 500 billion more in consumption and hard goods which was causing a lot of the supply chain issues right? There was all of a sudden surge in demand on the flip side, people were consuming less in terms of services and travel so all of that is in the process of reversing this year. And so you know we see it show up in in financial products so I talked about travel, credit cards um you know during the pandemic there is a lot of people doing things like home repairs and home improvement and new appliances so we, we see a lot of that flow through so definitely um yeah those are reflected in financial products as well. And nerdwallet has also said is expanding to both the UK and Canada talk more about the plans. Yes, so we think that the common problem exists across all countries which is, it's just really hard to find financial guidance, you can trust it's hard to find both trustworthy and knowledgeable advice, so UK and Canada are no exception so we're helping consumers first there um and small businesses in the UK actually compare everything from pensions to mortgages to credit cards and slowly landing expanding into more verticals and countries over the coming years. Alright, Tim Chen, co founder and Ceo of NErdwallet. I love your site, I love the UI to very nicely done. Tim Chen. Thank you so much for being on the show.