Rising interest rates, inflation leading consumers to rack up credit card debt
Rising interest rates coupled with crippling inflation has sent more and more Americans into debt using credit cards to pay for everyday necessities.
Credit card debt in the U.S. has surged over the past year as more Americans borrow money to keep spending. And with interest rates set to go up again, it might be even harder to break free of that crushing debt.
Swiping plastic has become more enticing than ever as high inflation digs deep into Americans’ pockets. As prices continue to rise, Americans are becoming increasingly reliant on credit cards to make purchases. And now, with the Federal Reserve’s latest three-quarter-percentage point hike, many of them will be paying more for the debt they’ve been accumulating.
Interest rates on nearly all credit cards and home equity lines of credit will increase after this latest rate hike, and borrowers with variable interest rates will notice the difference quickly, said Ted Rossman, senior industry analyst at Bankrate.
“It’s pretty much right away, within a statement cycle or two,” he said. At a little over 18%, the average annual percentage rate (APR) on new credit cards is within a percentage point of its all-time high of 19% set in July of 1991, according to Rossman. “The effect on existing credit card borrowers is probably actually worse,” he said, because of the rate hikes the Fed has undertaken already this year. “Chances are your credit card is al
