The Reason Credit Card Rates Are Increasing

Grand Law Firm

For Louisiana residents and others with credit card debt, an increase in the federal funds rate can lead to higher bills. This is because the fed funds rate and credit card interest rates are linked together. In March 2018, the Federal Reserve increased this rate to 1.75 percent. While other debts can be impacted by changes to this rate, credit card balances are the most likely to be subject to variable rates.

As of February 2018, the average interest rate for a credit card issued by a bank increased to 15.32 percent from 14.99 percent in November 2017. The reason why the funds rate rises periodically is that the Fed wants to contain inflation. Inflation tends to be more of a concern during good economic times when job creation is strong and wages increase.

It is thought that three or four more rate hikes could occur in 2018. To decrease the impact that this could have on a person's finances, it is recommended that cardholders pay down their balance in full each month. Using a balance transfer or personal loan can also be helpful in reducing the impact of rising credit card interest rates. Individuals can talk with financial advisors if they are having problems getting their debt under control.

There are many ways a person may go about obtaining debt relief. In some cases, it is possible to work with a creditor to have debt balances forgiven or payments postponed. Filing for a bankruptcy may be another option for those who want debt relief in a timely manner. In a bankruptcy case, credit card debt balances and other eligible balances may be discharged or reorganized to be paid over a period of three or five years.

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