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Now that The Federal Reserve has increased interest rates for the first time since 2006, many are left wondering how that could impact their credit card debt and other loans.
Shane Tripcony of Little Rock runs a consumer-advocacy website that aims to educate credit card users (http://www.bestprepaiddebitcards.com).
The interest rate hike was a modest .25%, but he says that still means the average consumer who has about $5,000 in debt will pay about $125 dollars more per year.
"That's not a huge impact, but it is still an impact," says Tripcony. "People that can really be impacted are the people that have high credit card debt and are barely making the minimum payments and so they are really paying just interest and are having a hard time with that. Then with this raise in interest rates, it's going to make it even harder for them."
"Since analysts in the field are saying that there's going to be ongoing interest rate hikes this year, this could become a financial crisis for some people," he adds.
Tripcony says consider balance transfer cards with zero percent interest, though many come with transfer fees. Or, low-interest cards with no transfer fees upfront and reduced interest rates on transferred balances.
Beyond Credit Cards
Many of the state's economic leaders have weighed in on the possible effects of the rate hike on Arkansas's economy. The Director of the Center for Business and Economic Research at University of Arkansas at Fayetteville, Kathy Deck, worries about a detrimental effect on manufacturing in the state, which has already been under duress.
Arkansas's Chief Economist, Michael Pakko, says it could lead to an increase in home sales, as demand temporarily goes up by buyers seeking to finance before mortgage rates peak.
Marc Fusaro, an associate professor of economics at Arkansas Tech, says he's concerned the increase will dampen new construction.
Talk Business reporter Wesley Brown produced a detailed report of their comments at a monetary policy meeting last month.
Other Thoughts from Tripcony
Tripcony says other loans that will likely be impacted are home equity lines of credit, auto loans, business loans, and some student loans.
He says that in addition to considering offers on credit cards from the big national players, there are good offers on credit cards to be found locally. He thinks it is worth shopping around for current offers at Arvest Bank, TruService Federal Credit Union, Arkansas Federal Credit Union, and Simmons Bank.
Disclaimer: Simmons Bank and TruService Community Federal Credit Union are advertisers on Tripcony's website.
Copyright 2016 KUAR
