Fed Increase Will Cost Consumers $800+ Billion

[jeffrey]

The Federal Reserve Board decided to continue where it left off at their last meeting with another increase of short-term interest rates by 25 basis points (0.25%) this week to 3.00%. This increase means The federal Reserve has increased the rate 200% in the past year from 1% in June 2004 with more rate increases predicted in the near future.

The action will raise the prime rate which is used by most credit card issuers to 6.00% and the result will be that those who carry a balance on their variable rate credit cards will be paying more in interest charges.




The increase in interest charges will affect over $300 billion in credit card balances and cost consumers more than $800 million in additional interest over the next year.

While the interest rate increase is bad news for those that carry a balance on variable credit cards, the Federal Reserve change will likely have a positive affect for those that keep savings in the bank. The increase should encourage an increase in the interest rate that banks and credit unions give to their customers.

Most experts don't see the rate hikes stopping anytime soon. Many are predicting the Fed wants to end up with a federal funds rate at 4% or possibly a bit higher.

[jmjj215]

Yet another reason to get out of debt, and get your money working for you instead of against you!