According to Bankrate.com’s Chief Financial Analyst, Greg McBride, credit card balances have hit a record high while interest rates are also rising due to the Federal Reserve’s rate hikes.
Home equity loans are now costing around 8%, 30-year mortgages around 6.5%, used car loans over 10%, and credit cards over 20%.
This rise in rates is impacting consumers who are carrying higher balances on their credit cards, with many households having to rely on credit cards to cover necessary expenses.
McBride notes that lower and middle-income households have been hit hardest by inflation, erasing any pandemic savings and leading to increased credit card spending.
As a result, even servicing existing variable rate debt has become more expensive.
McBride expects the Fed to continue hiking rates and notes that some banks are offering higher yields on deposits, though this is still an isolated trend.
Overall, rising interest rates and credit card balances are putting pressure on consumers and their spending habits.