Federal Reserve’s June rate hike to cost Americans $1.7 billion in 2017

Is another rate hike in store for the United States economy this week? It’s seems quite so.

The Federal Reserve will hold a Federal Open Market Committee (FOMC) meeting this week. According to the CME Group FedWatch tool, there is a market expectation of 99 percent that policymakers will raise interest rates for the second time this year. It is believed the Fed will move forward with a 25-basis increase to the target rate later this week.

Although you probably won’t see monetary policy hit the air waves and overtake the negative coverage of President Donald Trump, you should pay attention to the June FOMC meeting. Why? Because it’ll cost you.

WalletHub published new analysis on Monday that found another 25-basis hike will cost credit card users about $1.7 billion in additional finance charges in 2017.

In total, when you add the three previous rate hikes, Americans with credit card debt will pay about $6 billion this year.

This may also impact consumers with automobile loans and mortgages, says WalletHub:

The APR on the average 30-year fixed rate mortgage rose from 3.48% in late June 2016 to 3.89% in early June 2017, after reaching 4.32% in December.

The average APR on a 48-month new car loan rose from 4.00% in November 2015 to 4.52% in February 2017 (the most recent data available).

You’ll be seeing a lot more rate hikes coming to help contain inflation, which also means you’ll be spending much more to service your debt. That’s scary when you discover that total credit card debt will top $1 trillion this year.

Like this article? Get ECN delivered to your inbox daily. Subscribe here.

Comments

  1. JRATT1956 says:

    Fake News almost??? So the interest payment on my 15,000 credit card debt will be $3.13 per month higher if they raise the rate, but it will not amount to much since I will have it paid off in August 2018. As I pay the debt down interest payments will be even less. Wow car loans for 4.52%, I remember paying over 10% in the 1970’s and 1980’s.

Leave a Comment