CHICAGO (CBS) — The Federal Reserve’s decision to increase interest rates last week could do more than cost you more for a mortgage or car loan, it could increase your credit card bill as well.
When the Fed raised its rates, other rates went up too, like credit card interest rates.READ MORE: Woodridge Residents Cope With Emotional Impact Of Damage From Sunday Night Tornado; Village Places Priority On Getting Power Back On
According to analyst Robert Harrow of the personal finance research website ValuePenguin, Chicagoans will wind up paying $17 million total, and an average of $17 more a year per person in interest as a result.
“That’s $17 million that’s not being invested in Chicago businesses; consumers are just paying that money back to the banks and the card issuers,” he said.READ MORE: Residents Repairing Homes After Tornado Run Into Sky-High Prices For Lumber, Other Construction Materials
Harrow said, overall, Americans will pay at least $883 million dollars more in credit card interest payments in the coming year because of higher rates.
Those numbers likely will increase later this year, according to Harrow, because the Fed is expected to raise rates twice more this year.
Harrow said the best way to avoid paying higher credit card interest costs is to pay off credit card bills in full each month.MORE NEWS: Free Lollapalooza Tickets For Getting COVID Shots This Saturday
“Consumers just need to think of credit cards not as a vehicle to spend more than they can, and instead think of it as an extension of their debit card, or even their cash; and only buy things they can afford to pay off that month,” he said.