UPDATE 3:40 p.m. EST: During a news conference, Federal Reserve Chair Janet Yellen said the central bank believes the economy is on a real path to recovery.
"We expect the economy will continue to perform well, with the job market strengthening further and inflation to rise to 2 percent," she said. Overall, as household and business spending rises and the economy improves, we could see more rate hikes.
The Federal Reserve, the nation's central bank, just raised rates for the first time this year, meaning the Fed believes America's economy is perking up.
The last time the Fed board voted to raise its prime lending rate was one year ago. It's only the second time they've bumped up the key interest rate since the Great Recession of 2008-2009.
The Fed is raising the federal funds rate 0.25 percent, raising the rate the government charges banks and lending institutions to 0.5 percent.
Here's a link to the statement from the Federal Open Market Committee on the hike.
"The labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year," the Fed said in a statement. "Job gains have been solid in recent months and the unemployment rate has declined."
Rate increases typically are carried out to slow an economy that is growing too quickly. With unemployment at a low 4.6 percent and inflation below the Fed's 2 percent target, the central bank opted to raise rates, which was widely expected. The Fed has also signaled it will continue to gradually raise rates in 2017.
The Fed has kept rates near zero since the financial crisis, to stimulate the economy.
WATCH | Here's everything you wanted to know about the Federal Reserve, but didn't know to ask.
What does that mean for you?
Interest rates on credit cards and some car loans could go up. For home buyers, mortgage rates may also tick higher. And for student debt holders, those with variable rate loans could see the interest on those loans inch up.
On the plus side, savings accounts will start to pay more and banks will start to pay customers more on their deposits.
While the hike is a seemingly small number, if the Fed keeps to its estimates of three more hikes next year, consumers will feel the effects sooner rather than later.
"This single quarter-point move in interest rates will go largely unnoticed at the household level," Greg McBride, Bankrate.com's chief financial analyst, said. "But coupled with last year's hike, the cumulative effect could mount quickly if the Fed quickens the pace of rate hikes in 2017."