The Federal Reserve recently increased its benchmark interest rate for the second time in three months. While the economy is growing, there are concerns that many borrowers in Florida and around the nation will be paying more money for interest. Holders of credit card debt will likely notice the interest rate increase more than other borrowers.
Whereas student loans and mortgages are often set with fixed rates, credit cards typically come with variable rates. Therefore, when the Federal Reserve raises rates, a credit card company does the same. The latest increase by the Fed will potentially cost those with credit debt $1.6 billion more in interest charges this year. The increases are likely to occur within the next couple of billing cycles.
Many consumers depend on credit cards for routine expenses. Advisors strongly recommend paying off card balances each cycle. If this does not occur, whatever has been purchased will end up costing more due to interest costs. If someone has a balance, it is important to pay it off as quickly as possible and have a plan in place to accomplish this goal.
One plan is to pay off the balance with the highest interest rate first. Another option is to negotiate with credit card companies to secure a lower interest rate. A balance transfer to a card with a lower rate is also a possibility.
Many consumers in Florida may think their credit card debt is overwhelming, but don't know what steps to take to improve the situation. A bankruptcy attorney familiar with financial laws is available to review a client's unique needs and offer specific advice to help resolve a financial crisis. A dedicated lawyer can help consumers develop a plan to take control of their finances and work toward getting out of debt.
Source: host.madison.com, "Here's the Newest Reason to Worry About Credit Card Debt", Maurie Backman, March 19, 2017