Expectations are that the Federal Reserve will raise federal fund rates, hiking current levels by around 25 basis points, to between 0.5 and 0.75 percent. This will affect debts with variable interest rates, including outstanding balances on credit cards and private student loans. Also, many feel that Donald Trump's administration will pursue a higher rate of inflation, bringing even further costs in 2017.
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Matt Schultz, an industry expert, said, "Most people think that we're going to have multiple rate hikes from the Fed in the next year, and if those predictions are correct it's going to have an impact on folks who have credit card debt." Schulz pointed out that this should encourage all consumers to pay down their credit card debt as quickly as possible.
Many Americans may be tempted to dismiss the slight increase in interest rates now, but expert Sean McQuay cautioned, "That would be short-sighted. These rates are expected to continue to rise, and each change adds up and increases your debt burden."
Some of the most vulnerable spenders in society often hold large credit card bills. Even a small rise in interest could make it much harder than before to pay down their debts and clear their balances.
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This article was provided by our partners at moneytips.com.
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