Credit-card debt is a growing concern in America. Thanks to the growth and stability of the economy at this time, people have felt comfortable taking on debts they may not have in the past. There's a risk to taking on debt, though. One of those risks is facing hikes in your interest rates, costing you more money than you initially planned for.
If you have credit-card debt, you may want to do all you can to reduce it before a rate hike takes place in 2018. According to a news report from March 21, the Federal Reserve is raising interest by a quarter percentage. While that doesn't seem like much, it could hurt those with significant debt. Even worse is the fact that the Federal Reserve intends to raise the rates twice more this year.
With an average balance of $8,600 in a household, credit debt is already more than what typical consumers can handle. It's not sustainable, and interest rate hikes only make it worse. Unfortunately, even if you have a good rate through a credit-card company, the company is likely to raise rates in a reaction to the Federal Reserve's decision.
The average credit-card interest rate is presently standing at 16.8 percent, but with the hike, it could grow. It could actually grow several times this year and again in 2019, as well.
Credit-card debts can quickly take over your life, and it's important that you know you have a way out. There are options such as consolidation and bankruptcy that can help you if you get in over your head.
Source: Market Watch, "For consumers with credit-card debt, Fed rate hike will sting," Anora M. Gaudiano, March 21, 2018