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Increasing interest rates could make it harder to wipe out debt

Credit card use may be a ubiquitous part of holiday spending for some, whether they are paying for gifts, travel expenses or other holiday expenses. Some people in Louisville may not pay much heed to their interest rates, focusing more on simply making their required minimum monthly payments or even more than the minimum payment, if possible. However, ignoring interest rates can be a dangerous mistake.

It is anticipated that federal fund rates will be risen to between 0.5 and 0.75 percent by the Federal Reserve. This is bad news for those in Louisville who have debts with variable interest rates. Some examples of such debts include private student loans and credit card balances. Moreover, some anticipate that once President-Elect Donald Trump takes office, his administration will seek a higher inflation rate, meaning even more costs to debtors in the New Year.

Therefore, some industry experts are advising consumers to make every attempt to pay down their credit card debt, before the anticipated rate hikes begin, if possible. Although this increase in interest rates may not seem like much, it is anticipated that they will only go up, and the higher they become, the greater effect it has on a person's debts as the person will be responsible for paying increasingly larger amounts of interest. This could make it difficult, if not impossible, for some debtors to clear their balances.

Sometimes, credit card debt tends to balloon until it becomes too much for the debtor to handle. This is not the debtor's fault though. Medical expenses, an unexpected car repair or other emergency could cause a person to have to put hundreds or even thousands of dollars onto their credit cards.

If a person in Louisville has an overwhelming amount of credit card debt, one option he or she may want to explore is filing for bankruptcy. Chapter 7 bankruptcy can be a means for a person to wipe out debt and move forward in the New Year on fresh financial footing.

Source: FOX Business, "Fed Rate Hike Could Affect Interest on Credit Card Debt," Shaun Plum, Dec. 15, 2016

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