Banks rejoice as consumers take on more debt

U.S. stocks may be having a bit of a downbeat session on Wednesday, but financial shares were seeing a lift with a jump in borrowing costs providing a boost.

Borrowing costs have increased following the U.S. Federal Reserve’s three rate hikes in 2017. The Fed is expected to hike rates again in 2018. According to Reuters, Fed officials’ median forecast is for three more hikes in 2018. Goldman Sachs (NYSE:GS), however, anticipates four rate hikes this year.

While borrowing costs are increasing, consumer debt is skyrocketing. The Federal Reserve just announced that consumer credit card balances rose 13% in November to a new all-time high of more than $1 trillion.

"This record should serve as a wake-up call to American consumers to make 2018 the year they get their credit card debt under control. It's especially important because we expect interest rates to keep rising this year, which means that your debt will only grow faster and faster unless you take action," according to Matt Schulz, senior industry analyst at

Credit cards are not the only areas where consumers are taking on additional debt. According to the Fed, consumer credit increased at a seasonally adjusted annual rate of 8.75% in November while non-revolving credit increased at an annual rate of 7.25%.