SOME PLEASED WITH RATE INCREASE

Last week's Federal Reserve decision to once again raise key interest rates comes as good news to some individuals who rely on interest to supplement their income.

The Federal Reserve increased key interest rates three-quarters of a percentage point on Tuesday in its most dramatic move yet to slow the surging economy and prevent a new cycle of inflation.

The Fed increased its target for the federal funds rate, the interest that banks charge each other, from 4.75 percent, where it had been since Aug. 16, to 5.5 percent.

The increase marked the sixth rise this year in the federal funds rate, which started the year at 3 percent. It also marked the biggest jump in the Fed's discount rate since it was raised a full percentage point in May 1981, a period when the central bank was pushing interest rates to the highest level since the Civil War.

As in 1980 and 1981 when Money Market Certificates were in double figures -- 12 to 15 percent -- higher rates can carry a silver lining for consumers with cash to spare.

"Anything helps," said one investor in certificates of deposit who depends heavily on interest to supplement his retirement.

"I remember the 15 percent rates, and I also remember the 3 to 4 percent rates of more recent times," he said. "You won't find me complaining about any rate increases."

While passbook accounts still pay a mere 2.2 to 2.5 percent on average, certificate of deposit rates have been rising more than loan rates since the Fed starting raising rates in February.

"CD and MMC rates are not near double figures, but they're almost double what they were early in the year," said one bank spokesperson. "Most of our CD activity these days are short-term -- 12 months or under. We have some special rates."

Special short-term CD rates being offered range from 5.1 percent for seven-month certificates to 6 percent for nine months and 6.1 for special 12-month rates.

In January, the Federal Reserve rates were at 3 percent. Six changes later, the rates are at 5.5. It all started Feb. 4, when the Feds raised rates one quarter of a point, to 3.25.

As a result of the higher rates, interest on auto loans, mortgages and credit cards will rise in the next three or four months.

Stephen Brobeck, executive director of the Consumer Federation of America, says his group's advice following the latest hike is simple.

"Pay down high-rate loans, and invest in short-term CDs and Money Markets," Brobeck said.

Money market rates are up too.

"The big investment interest is on CDs," said Betty Domian, a stock broker with Edward D. Jones Inc., "but we're seeing a lot of interest in the money markets."

Money markets, said Domian, have been pretty boring the past few years, with yields between 2 and 3 percent. The yields have about doubled since January of this year.

"Money markets or CDS are good places to stash cash these days," she said. Money market funds are "liquid" all the time.

"You can put money in today and take it out tomorrow," said Domian. "You can even write checks on it. It's a good method to do business."

Investors can open a money market account with $1,000 and must maintain a $500 minimum balance.

The big difference in CDs and Money Market Certificates is that investors can "lock in" the CDs for a particular period of time. The MMC rate can go up or down quickly.

Another difference is the minimum investment requirement. Many short term CDS have minimum investments of $5,000, but MMCs are available for $1,000.