Fed rate hikes could drive up your credit card bill

InvestigateTV – The average American has $5,000 in credit card debt according to Trans Unionand with rising interest rates, this amount could increase.

In 2022, the Federal Reserve increased interest rates four times and with each increase, your credit card’s variable rate increases over the next few months.

If you pay off all of your credit card debt each month and avoid interest, you don’t have to worry about increases. But for the millions of Americans who have credit card debt, the new rate can result in hundreds of dollars over the years.

Ted Rossman, Senior Industry Analyst at The bank rate, said the national average credit card rate before the rate hikes was 17.5%. .

“So if you were only making minimum payments for $5,000 debt at 17.5%, you would have been in debt for over 15 years and spent about $6,000 in interest,” Rossman explained. He continued to say that a 0.75% increase would add about $300 in interest to the original debt of $5,000.

Rossman urged consumers to pay off that debt as soon as possible and offered some suggestions:

  • Transfer balance to card at 0%
  • Get a side job
  • Sell ​​items you no longer need
  • Reduce your regular expenses, especially monthly charges and fees
  • Consider debt consolidation

Additionally, Rossman suggested contacting a reputable nonprofit credit counselor like the National Credit Counseling Foundation for advice on how to manage your debt.

The Federal Trade Commission offers free advice on how to choose a credit counselor.