Many people in Tennessee and elsewhere carry balances on their credit cards from one month to the next. Although credit cards offer a convenient form of payment, consumers who do not pay their balances in full each month incur additional credit card debt through the high interest rates many cards charge. Now, the federal government is expected to increase interest rates, which is likely unwelcome news to the people who owe significant amounts on their credit cards.
Although it seems almost counterintuitive, experts point to the fact that the nation is in a strong economy as the reason the Federal Reserve Bank will likely increase interest rates this year. However, consumers currently owe well over $1 trillion on their credit cards, which amounts to more than $15,000 for each household, on average. A rise in interest rates will, of course, only increase the debt burden so many already face.
The purported .25 percent increase in the Federal funds rate will add possibly hundreds of dollars to consumers’ balances over the course of a loan, depending on their current interest rates and outstanding balances, and many are apparently already struggling to pay the money they owe. In fact, several banks have already published data that shows charge-off rates are starting to climb again after a brief period of falling after 2011. Furthermore, some are suggesting that the enticing zero percent credit card promotions some companies offer may be on the way out.
Dealing with overwhelming credit card debt can be very stressful and challenging. Unfortunately, the imminent interest rate increase will only make the situation worse for some. However, relief is available, and those in Tennessee seeking relief should consult a local attorney experienced in bankruptcy and other debt relief options.
Source: Forbes, “Why Increasing Credit Card Interest Rates Can Be A Problem In 2018“, Robert Harrow, May 5, 2018