Credit Card Debt Is Becoming More Expensive

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With credit scores at an all-time high and credit card delinquency rates near all-time lows, the Federal Reserve has raised rates four times since December of 2015. Experts say because of the increased interest rates, it will cost consumers more to pay their bills.

According to Jill Gonzalez, an analyst for the finance website Wallethub, the Federal Reserve’s rate hikes will cost credit card users an extra $6 billion in interest this year alone. That means debt becomes more expensive when the Fed raises rates, making it harder to pay bills on time and threatens credit scores. When credit scores fall, costs rise even more.

“It’s been quite a while since the Great Recession,” she said. “We’re seeing things on credit reports that occurred around the Great Recession or maybe right after it, starting to drop off those reports, so whether that’s personal bankruptcy, which typically stays on a credit report for ten years. We’re also seeing less than stellar things, whether it’s collection accounts etc., drop off of credit reports after seven to ten years.”

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