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Tags: interest rates | debt | personal finances | inflation | recession

Credit Cards Top 20%, Mortgages Near 6%

Credit Cards Top 20%, Mortgages Near 6%
(AP)

By    |   Friday, 17 June 2022 04:13 PM EDT

Credit card interest rates have already soared past 20%, and 30-year mortgages have risen to 5.78%.

And the Fed has only just begun.

Inflation and rising borrowing costs are already pounding Americans, with the cost of gas, food, rent and borrowing money expected to go even higher as the Federal Reserve’s rate-hiking to subdue 40-year-high inflation trickles through the economy.

“If the Fed accomplishes what it’s advertised, that’s going to be different than what most people have experiences in their lifetimes,” says Mark Hamrick, senior economic analyst at Bankrate.

If prices continue rising at this rate, some people may not be able to pay their bills, Sara Rathner, a credit card analyst at NerdWallet tells Bloomberg.

CEOs of some large banks have said that, on balance, Americans’ personal finances are healthy and that they have up to six months’ of excess buying power.

However, for the unfortunate who have been using their credit cards to pay everyday bills and who are now saddled with thousands of dollars of debt, the interest rate charges on those bills might cause them to default.

Retirees and near-retirees have also been punished, as stocks, bonds and the valuations of other assets classes have been pummeled in the past two months.

If too many Americans become burdened with unmanageable short-term debt and the economy plummets into a recession, unemployment will rise. Widespread pain will be felt at all economic levels.

“The worst-case scenario is that companies cut jobs, and the ones that might have expanded don’t expand,” says Erica Groshen a former Bureau of Labor Statistics commissioner. “Then everybody loses confidence, and we get the downward spiral into recession.

© 2022 Newsmax Finance. All rights reserved.


StreetTalk
Credit card interest rates have already soared past 20%, and 30-year mortgages have risen to 5.78%. And the Fed has only just begun.
interest rates, debt, personal finances, inflation, recession
275
2022-13-17
Friday, 17 June 2022 04:13 PM
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