The Financial organizations with their recent decision to increase the nation’s interest rates might not go well with the consumers.
Many predict that it is expected to cost consumers around 192 million dollars on a monthly basis on their credit card balances.
Moreover, as per the latest data obtained from the financial organizations, the interest rates would be increased from this month.
Also, the increase in interest rates would be considered in one and two billing periods.
The impact of the sharp increase in interest rates on the average person
The big hike in the benefit rates suggests that the economy has reached a point from where it is no longer in need of federal assistance. Also, it is expected that businesses and consumers would show a rising trend to pay more and to borrow.
On the other hand, for a majority of users who are in possession of credit cards, the interest rates would be higher when compared to the period before the financial crisis. On the other hand, the interest rates of the credit are linked with the prime.
As a result of which the interest rates are showing an increasing trend of 0.25 percentages on 924 billion dollars in consumer debts.
This is the report that has been obtained from the Federal Register for October 2016.
The prospect of a small credit card balance in buying a car
It is observed that the low credit card balance per card and individual is around 7500 dollars. Moreover, it adds 18.75 dollars extra to the yearly interest rates of a person carrying a credit card.
On the flip side, an individual gives approximately 17000 dollars in credit card debt. Moreover, the interest rate on that debt is around 15%.
Hence, with the introduction of the new rate of interest, the individual would pay around an extra amount of 40 dollars in credit card interest annually by opting to visit website.
However, it is worthwhile to note that the mortgage rates that are long-term and do not have any links to the interest rate may not be affected by the increasing trend of the interest rates.
On the other hand, the individuals who are in possession of adjustable-rate mortgages are the most likely ones who would be affected by the hike in interest rates.
On the contrary, many experts are of the opinion that increasing interest rates may imply that there is a more extended repayment period for many consumers.