ATLANTA - The Federal Reserve raised its benchmark interest rate and there's more likely coming this year. What does that mean to real people like me and you? Iif you have revolving credit card debt then it can mean a lot.
That rate increase, as explained by a finance blog, "is all but guaranteed to be passed on to cardholders with balances." How? Well, the banks will now most likely raise their prime rate by the same .25 percentage points or a quarter of a point and that trickles down to what banks charge their customers.
Now let's talk about credit cards. Your annual percentage rate will likely change, too. Been using your credit card and not paying off the balance each month? Well, you're paying a lot of interest and now you will pay more which means your credit card payment will go up.
Lending Tree, which provides auto, mortgage, and personal loans, puts it this way. In April 2017 the prime lending rate was 3.75 percent which meant the average credit card's rate was 13.86 percent. One year later the prime lending rate was up to 4.5 percent which pushed credit card figures up to 14.99 percent. Big jump. Now let's look at today's new numbers. The Feds pushed up its prime lending rate to 5 percentage points. It's estimated that your credit card's interest will look more like 15.57 percent. So in a year and a half, you're paying monthly a lot more money when you spend on credit.
And Feds are expected to keep moving that figure up. So, if you were thinking about finally paying off a credit card, now would be the time to get this done, folks.