The Federal Reserve is tightening credit as the economy shows signs of strength, ending a prolonged period of low-interest rates in the wake of the financial crisis.
As a result, banks pushed the fixed rate on U.S. farm loans recently to a five-year high.
But you don’t need to be a farmer to feel the impact of higher interest rates.
Expensive Lending Options to Rising Credit Card Interest Rates
Borrowing money is getting more expensive as interest rates rise, and some credit-card holders are struggling to keep up, according to The Business Insider.
Some people are ditching credit cards in favor of cash, saving up, or passing on purchases. The number of credit inquiries within the past six months, a gauge of demand for credit cards, fell in the first quarter to a record low, according to the Federal Reserve Bank of New York.
You could get surprised by your credit card statements after rates rise when your annual percentage rate jumps two or three percentage points.
Credit card debt comes with a cost. The average household with revolving credit card debt pays $904 in interest annually, according to Nerd Wallet.
As such, that debt will cost you more, and you will want to adjust your monthly budget to accommodate that. Or better yet, pay down those debts before rates go up.
And don’t forget to look at how these moves could affect your investments.
Provident Loan Society is Credit Card Alternative
As a not-for-profit organization, Provident Loan Society of New York can help you with cash loans, even as interest rates with credit cards.
The interest rate with Provident Loan Society is typically lower than traditional pawnshops (26% versus 48%), and even many credit cards. It can be a better way to borrow money at a lower cost.
You can find out your fees, or compare costs with the Provident Loan Society Fast Cash Calculator.
The not-for-profit lending organization has been a trusted lending source to New Yorkers for over 100 years. They have longer payback periods compared with traditional pawnshops (six months versus four months) and minimal ticket and handling fee.
About the Author
Charlotte Knobben studies journalism in The Netherlands and currently lives in New York City.