WASHINGTON–Any increases in rates may seem incremental to financial institutions, but for consumers they add up to billions of dollars in new finance charges, according to one new analysis.
Analysis released by WalletHub said that should the Fed move this week to push the Fed Funds rate up by another quarter-point, credit card borrowers will feel it most. Another 25-basis point increase will cost credit card users roughly $1.5 billion in extra finance charges during 2017, said WalletHub.
“When you factor in the three previous rate hikes, credit card users will wind up paying around $6 billion more in 2017 than they would have otherwise,” the company said. “This complicates an already bad situation for credit card users, considering that WalletHub expects outstanding balances to far surpass $1 trillion in 2017.”
WalletHub noted that the effect of any Fed move on mortgage and auto loan rates is more difficult to predict, because they are longer-term borrowing vehicles with fixed rates.
“But if recent rate hikes are any indication, we should see an increase in home-and-auto borrowing costs in the coming months,” WalletHub said.