SPRINGFIELD, Mass. (WWLP) – For the first time in several years, the Federal Reserve is expected to raise interest rates here in the United States, and that could have a big impact on consumers.
The latest reports show that U.S. employers added 215,000 jobs in July, and financial experts argue that means there is a steady incline in the jobs market. Mark Teed of Raymond James and Associates told 22News that this means Federal Reserve Chair Janet Yellen could raise interest rates as soon as September.
“Well, immediately it will help all the interest rates go up at the banks. Banks will start to credit a little bit more interest into your account, but it also might raise the mortgage rates it also might raise some of the credit card rates,” Teed said.
If credit card interest rates do go up, it will affect those carrying a balance the most. John Szalicki at Cambridge Credit Counseling in Agawam warns the higher the interest rate, the higher the finance charge, the less your monthly payment goes towards paying down your debt.
“So if you have a $10,000 card and your minimum payment is $200, and your interest rate is 20%, two thirds of that $200 is finance charges, your balance only goes down maybe $50 dollars when you pay $200,” Szalicki said.
Right now, credit card debt is the third-largest type of household debt in the nation, just behind mortgages and student loan debt.
The National Foundation for Credit Counseling reports that right now, roughly 35 million people are rolling over at least $2,500 in credit card debt every month.
Szalicki says if you fall into that category, now is the best time call a non-profit credit counselor for help, before interest rates go up.