What does the Fed rate hike mean for Americans as phone and utility bills rise?

US Fed rate hike raises borrowing costs while potentially boosting savings returns, as Americans also face higher cell phone, utility and energy bills.

The US Federal Reserve has raised interest rates by 0.25 percentage point, taking its benchmark federal funds rate to 3.75%-4%. The move is aimed at slowing inflation by making borrowing more expensive and reducing spending.

The rate hike is bad news for many borrowers but can help savers. People with new loans or variable-rate debt could pay more interest, while people putting money into savings accounts or CDs could get higher returns.

The Fed's move came as inflation remains above its 2% target. Consumer prices rose 3.4% in August from a year earlier, while the monthly increase rose to 0.4% from July, according to the Labor Department.

Fed Chair Kevin Warsh has said the central bank has “no tolerance for persistently elevated inflation.” He said stable prices are particularly important for lower-income Americans because they are hit hardest by rising prices, as cited by Yahoo Finance.

Millions of Americans are already paying more for wireless service. T-Mobile said in late July that it was retiring more than 1,000 older plans and moving customers to newer plans costing as much as $6 more per line each month.

AT&T also raised prices on some older plans. Starting August 5, the company increased some plan prices by $10-$20 and raised a monthly per-line fee by another $1.