Credit Card Debt

Credit Card Debt

If you have credit-card debt, it just got a little more expensive.

The Federal Reserve on Wednesday raised its benchmark federal funds rate by a quarter-percentage point — to a range between 1.75% and 2% — as many economists had expected. What consumers might not expect: Their credit-card bill is going up, too.

Consumers with credit-card debt will likely pay an additional $2.2 billion in interest payments annually, according to an analysis from the credit-card website 

To determine that number, analysts at the site looked how much those carrying a balance pay in interest, based on the current average annual percentage rate (APR). They used a 15.32% APR as a base, which rose to 15.57% after the hike.

Cardholders currently have about $1 trillion in credit-card debt collectively, according to the Federal Reserve. Based on those numbers, CompareCards concluded they will collectively pay $2.2 billion more with a 25-basis point hike.


See Also Trump Productions: All the President’s Videos

Why 92% of Americans mistrust their own financial institution

The Fed raises and lowers interest rates in an attempt to control inflation. When the Federal Reserve raises its rates, it’s costs more for banks to borrow money. And they typically pass on those costs to the consumer.

Credit-card interest rates are variable and tied to the prime rate, an index a few percentage points above the federal funds rate. It is a benchmark that banks use to set home equity lines of credit and credit-card rates. As federal funds rates rise, the prime rate does, too.

When the Fed rate goes up, consumers will typically see the impact within about 60 days. People with credit-card debt should consider trying to refinance or consolidate it now, or transfer it to a card with a lower interest rate.

“Rising interest rates will start taking a toll on borrowers that are already stretched to the limit with tight household budgets,” said Greg McBride, chief financial analyst at the personal-finance website Bankrate. “Higher rates and higher payments will squeeze the buying power of households without a compensating increase in wages.”

However, if the banks do start to collect more funds, they may then offer higher rates on savings products including savings accounts and CDs, to attract consumers, McBride said. “Shop around among online banks, community banks and credit unions, which tend to offer notably higher returns than larger banks,” he said.

Greg Johnson CalBRE 02003797 Headshot
Phone: 562-446-5267
Dated: June 15th 2018
Views: 118
About Greg: Greg Johnson was born and raised in Long Beach California. He was born into a family with a real est...

Property Search

RSS Feed

View our latest blog posts in your RSS reader. Click here to access. RSS

Search Blog

Recent Blogs

Successfully Staging A Home With Pets - Successfully Staging a Home With
Buy A Home Without Alot Of Cash - How to Buy a New Home When You
Credit Card Debt - If you have credit-card debt, it
Increase Your Homes Value - How to Increase Your

Saved Properties

This is a list of your favorite properties. We will email you if a property is reduced or leaves the market.

Click 'Save' to add a property to this list.

Register / Login

New & returning visitors please enter your information to login.

By clicking 'register' you are agreeing to our terms of use & giving us expressed written consent to contact you.

Questions? Comments? Complaints?

This message will go directly to the head of our team.

Location & Address

Brad Andersohn
2603 Camino Ramon Suite 200
San Ramon, CA