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The Federal Reserve Board decided to be a bit Grinchy this holiday season as it increased short-term interest rates by 25 basis points (0.25%) this week for the fifth time this year for a total of 125 basis points (1.25%) since the beginning of the summer. This will raise the prime rate, which is used by most credit card issuers, to 5.25% and the result will be that those who carry a balance on their variable rate credit cards will be paying more in interest charges
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 an additional $825 million in additional interest over the next year. The five rate hikes combined will cost consumers $4.1 billion in extra interest charges over the next twelve months.
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The majority of variable credit cards adjust their interest rates on the last day of each month, so the Federal Reserve's rate hike will kick in before consumers begin tackling their holiday season shopping debt.
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 an additional $825 million in additional interest over the next year. The five rate hikes combined will cost consumers $4.1 billion in extra interest charges over the next twelve months.
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The majority of variable credit cards adjust their interest rates on the last day of each month, so the Federal Reserve's rate hike will kick in before consumers begin tackling their holiday season shopping debt.
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