WASHINGTON—The Federal Reserve’s four rate hikes since December 2015 have cost credit card users an extra $6-billion in interest in 2017, according to a new report.
That figure will swell by an additional $1.46 billion in 2018 if the Fed raises its target rate again this week as expected, stated WalletHub, which also conducted a nation survey to gauge public sentiment about Fed rate hikes.
“All signs point to the Federal Reserve increasing its target rate in December 2017. It’s just a question of by how much,” stated WalletHub.
Here’s how the Fed interest rate increases have impacted consumers’ finances in the past as well as how much a December 2017 rate hike is expected to cost, according to WalletHub:
- Another 25-basis point increase will cost credit card users roughly $1.46 billion in extra finance charges during 2018
- Factoring in the four previous rate hikes, credit card users will wind up paying around $7.4 billion more in 2018 than they would have otherwise
- “Mortgage and auto loan rates are more difficult to predict because they are longer-term borrowing vehicles with fixed rates,” stated WalletHub. “But if recent rate hikes are any indication, we should see an increase in home and auto borrowing costs in the coming months”:
- The APR on the average 30-year fixed rate mortgage rose from 3.48% in late June 2016 to 4.32% last December, before settling at 3.94% in early December 2017 (the most recent data available)
- The average APR on a 48-month new car loan rose from 4.00% in November 2015 to 4.42% in August 2017 (the most recent data available)
- Savings account yields have increased by just 19 basis points on average since December 2015, despite 100-basis points in Fed hikes since then (not including Dec. 2017)