What the Fed interest rate hike means for credit card payments – money.andronezia.com

By | March 10, 2023


“Everyone who has an outstanding balance on their credit card should watch those interest rates,” said Memphis economist Dr. David Kemme.

MEMPHIS, Tenn. — The Federal Reserve says it’s looking at another rate hike, but some elected leaders like Elizabeth Warren say this could potentially cost up to two million Americans out of their jobs.

Memphis economist Dr. David Kemme said the Federal Reserve’s goal with raising interest rates was to slow consumer demand without triggering a recession. The Fed said they want to do this more often.

“It’s like cutting something with a dull knife,” says Kemme.

The concern raised by this plan, Kemme said, was the impact it would have on American jobs.

“That will be in the most interest rate sensitive sector of the economy, meaning construction and new homes,” said Kemme, who added that if rates continue to rise, interest rates could be adjusted on things like credit cards, mortgages and loans. home equity will do the same.

This can make it more difficult to pay off credit card debt and buy a home.

When interest rates are 3% in 2021, homebuyers can own a $400,000 mortgage. This year, the same amount will only cover $248,000, now the rate is as high as 7%.

“That interest rate is going to go up,” says Kemme, “Everyone who has an outstanding balance on their credit card should pay attention to that interest rate.”

Economists recommend people in the Mid-South make adjustments, and not borrow adjustable-rate loans, instead consider fixed rates.

Also, after the debt is paid off, look for another credit card with a better rate.

“This is a real competitive aspect of credit cards,” says Kemme.

At grocery stores, economists said while inflation rates slowed, prices were expected to stabilize. This doesn’t mean the price will drop again, it means what we see on the shelves will most likely stay.

“So the product in your grocery store, the price will stabilize,” says Dr. John Gnuschke of the University of Memphis, “That stabilization should really take effect in the summer.”

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