Federal Funds Rate Increase

The Federal Reserve (Fed) sets the federal funds rate, which is the interest rate that banks charge each other for overnight loans. This rate is used as a benchmark for other interest rates, including the prime rate. The prime rate is the interest rate that banks charge their most creditworthy customers, such as businesses and individuals with excellent credit.

Credit card interest rates are typically tied to the prime rate. This means that when the Fed raises the federal funds rate, the prime rate also goes up. And when the prime rate goes up, credit card interest rates typically follow.

For example, if the Fed raises the federal funds rate by 0.25%, the prime rate will also go up by 0.25%. This means that if your credit card has a variable APR, the interest rate on your balance will also go up by 0.25%.

The Fed has been raising interest rates in an effort to combat inflation. This means that credit card interest rates are likely to continue to go up in the near future. If you have a balance on your credit card, this could mean that you will pay more interest on your debt.

Here are some things you can do to minimize the impact of rising interest rates on your credit card debt:

  • Pay off your balance as quickly as possible.
  • Consider a balance transfer card with a 0% APR introductory period.
  • Ask your credit card issuer to lower your interest rate.
  • Make sure you are making at least the minimum monthly payment.
  • By taking these steps, you can help to protect yourself from the financial impact of rising interest rates.

Here are some additional things to keep in mind:

  • Not all credit cards have variable APRs. Some cards have fixed APRs, which means that the interest rate will not change over time.
  • The Fed does not directly control credit card interest rates. However, the federal funds rate is a major factor that influences these rates.
  • The impact of rising interest rates on credit card debt will vary depending on the amount of debt you have, your credit score, and other factors.

The latest Fed interest rate is 5.25% – 5.5%. The Federal Reserve raised the target range for the federal funds rate by 0.25 percentage point in its July 2023 meeting, in line with market expectations. This is the highest level the federal funds rate has been since January 2001.

The Fed is expected to continue raising interest rates in an effort to combat inflation. The next meeting of the Federal Open Market Committee is scheduled for September 2023. It is expected that the Fed will raise interest rates by another 0.25 percentage point at this meeting.

The impact of rising interest rates on the economy is uncertain. Some economists believe that the Fed is raising interest rates too quickly and that this could lead to a recession. Others believe that the Fed is raising interest rates at a pace that is appropriate to control inflation.

Only time will tell what the ultimate impact of rising interest rates will be on the economy. However, it is clear that these rates will have a significant impact on the cost of borrowing money, which could lead to higher mortgage rates, car loan rates, and credit card interest rates.



Unpaid Medical Bills Can Affect Your Credit Score

Doctors and medical offices don’t report your unpaid bills to the credit reporting agencies. They send them to bill collection agencies and they report your debt. Once reported, the unpaid medical debt may negatively impact your credit score making it drop 50 to 100 points. Whether paid or not, the medical debt reported will stay on your credit report for up to 7 years.

Did You Know? About Chapter 7 Bankruptcy

The credit reporting agencies tell us that your Chapter 7 bankruptcy will stay on your credit report for up to 10 years. However, what many people don’t know is that approximately 2 years after filing for chapter 7 bankruptcy, your credit score will improve if you maintain a good bill payment record. Additionally, you may be able to acquire new credit cards after the 2 year period.

Improve your credit score and reduce your credit card interest rates

Your bad credit isn’t just a nuisance; it will impact every area of your life. When you finally decide to take matters into your own hands and fix your credit problems, many areas of your life will improve.

Luckily, these days there are a lot of options for proactive and hands-on folks who want to take back control of their financial lives. While there are many DIY credit repair options out there, getting professional help can walk you through the sheer volume of necessary procedures which can be overwhelming — not to mention being sure you’re getting the right information.

That’s why we’ve put together a simple plan to get you back on the right financial track.  Call or email us for a quick chat to see if we can put a plan in place to reduce your stress and get your credit score higher than ever.