On September 26th the Federal Reserve is set to increase the interest rate and a recent report by WalletHub titled the Fed Rate Hike report takes a detailed look into what this rate increase could mean to individuals with credit card debt.
According to the report, this rate increase by the Fed could cost individuals with credit card debt and extra 1.6 billion dollars and the next year alone and 98 million Americans think interest rate hikes are bad for the economy. In an interesting related note, the survey also found that only 59% of people think their credit card interest rates are already too high. I would have assumed that number to be much higher considering what individual realistically enjoys paying any interest rate at any level.
Wallethub in the report projects that by the end of 2018 Americans will end up with more than 100 billion more in credit card debt than we started with keeping in mind that at the beginning of this year Americans owed more than 1 trillion in credit card debt.
With a political scope, the survey found that 27% of people think that President Trump knows how to grow the economy better than the Federal Reserve yet 46% of people don’t know when the Fed last raised its target rate.
The credit market is only going to get even tighter as consumers continue to borrow and take on more debt and the debt ceiling continues to climb over a trillion dollars. The more significant issue that I see is that the average individual borrowing and taking on debt does not fully understand the agreement they are entering into. This lack of knowledge is why I firmly believe that financial institutions can find great opportunities and providing education to their clients to help them better understand not only credit but all the financial tools available to them.