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You can thank the Federal Reserve Board for an increase in your credit card costs if you carry a balance on a variable rate credit card. The Federal Reserve raised short-term interest rates by 25 basis points (0.25%) this week and a total of 100 basis points (1.00%) since the beginning of the summer. This will raise the prime rate, which is used by most credit card issuers, to 5.00%.
According to CardWeb.com, approximately $330 billion in credit card balances will be directly affected by the Federal Reserve's 0.25% rate hike and cost consumers about $825 million in additional interest over the next year. The four rate hikes combined will cost consumers $3.3 billion in extra interest charges over the next twelve months.
Most variable credit cards adjust their interest rates on the last day of each month, so the Federal Reserve's rate hike will kick in at the heart of the Christmas season shopping.
According to CardWeb.com, approximately $330 billion in credit card balances will be directly affected by the Federal Reserve's 0.25% rate hike and cost consumers about $825 million in additional interest over the next year. The four rate hikes combined will cost consumers $3.3 billion in extra interest charges over the next twelve months.
Most variable credit cards adjust their interest rates on the last day of each month, so the Federal Reserve's rate hike will kick in at the heart of the Christmas season shopping.