When the federal funds rate is increased, interest rates rise likewise for consumers in Florida and across the country. An increase like this would affect a variety of financial instruments, including credit cards. For those people who carry credit card debt, the situation could prove to be difficult.
The economy is considered to be stronger, as overall conditions are favorable. However, consumer debt is a growing problem. After a low in 2013, revolving debt has been increasing. At the end of 2017, the total credit card balances owed exceeded $1 trillion. For those households with card balances, the amount owed was $15,000.
Unfortunately, as the interest rates are set to increase, those balances will become more expensive to maintain. Also, some major credit card companies indicate that their charge-off rates for accounts the banks have defined as unable to recover have already increased. A financial publication indicates that those consumers who are behind three months or more in repayments are at the highest level in the past seven years.
One frequent tool used by many consumers in a debt reduction plan is a zero percent interest credit card. Despite their popularity and usage, signs are pointing to the possibility that these programs may be curtailed or eliminated altogether. Some major card companies, such as Citibank, have discussed reducing or cutting these promotions in the wake of increased interest rates.
Credit card debt may be a burden for many consumers, and it may get worse with rising rates looming. To take control of one’s financial situation, it would prudent to seek the guidance of a Florida bankruptcy attorney. A trusted lawyer will help clients develop a tailored plan to reduce or eliminate their debt.
Source: Forbes, “Why Increasing Credit Card Interest Rates Can Be A Problem In 2018“, Robert Harrow, March 5, 2018