WASHINGTON–With the Federal Reserve largely expected to raise rates another 25 basis points before it adjourns its May meeting on Wednesday, a new analysis by WalletHub has found the 500 basis points in increases since March 2022 will cost people with credit card debt at least $33.4 billion over the next 12 months.
The forecast was included in WalletHub’s new Fed Rate Hike Survey, which seeks to gauge consumer sentiment on the issue.
Key Findings
Amon the key findings in the survey:
- Summer Bummer: 46% of people say the Fed’s interest rate hikes will affect their summer plans.
- Widespread Wallet Woes: Nearly seven in 10 people say their wallets have been affected by the Fed raising interest rates.
- Consumer Anger Increasing: 27% more people feel upset about the Fed raising interest rates again, compared to March.
- Grocery Bills Inflated the Most: 71% of Americans say their monthly grocery expenses have been affected by inflation the most, followed by gas (16%) and housing (14%).
- High Inflation Anxiety: 42% of Americans are very concerned about inflation right now.
- Concerns Over Job Security: Nearly 4X more Americans ages 18 to 29 say their job is at risk if the Fed continues to raise interest rates, compared to people who are at least 59 years old.
Projected Impact
Additional data points released by WalletHub include:
- A 25-basis-point increase in the Fed’s target rate will cost credit card users at least $1.7 billion in the next 12 months.
- The Fed’s May 3 rate hike has already increased the cost of the average 30-year mortgage by $11,160 over the life of the loan, “as rate hikes are usually priced into mortgage rates in advance.”
- WalletHub expects the average APR on a 48-month new car loan to rise by around 12 basis points in the months following the Fed’s next 25-basis-point rate hike.
- For the full results: Fed Rate Hike Survey.
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