The prospect of a Federal Reserve interest rate hike has plenty of investors on edge, but there is also another group that needs to take notice … people who carry a balance on their credit cards.
Consumers have been taking on more credit card debt, and they are not paying it off every month. If interest rates rise, that behavior could become significantly more costly.
Total credit card debt stood at $901 billion in May, according to Federal Reserve data, up 3.19 percent from a year earlier and up further, from $839.5 billion, as of the end of 2010. It is the third largest type of household debt, after mortgages and student loans. And a Nerdwallet analysis of Fed data found that among households with credit card debt, the average balance stood at $15,863 as of July.