Inflation is at the highest level in 40 years, and the Federal Reserve is expected to act as soon as March to start cooling things down. The Fed hopes to do that by raising the federal funds rate. This will drive up the cost of borrowing for businesses and consumers.
“Typically, any moves that the Fed makes with interest rates, they get filtered through to credit card users within one to two months,” said Ted Rossman, chief industry analyst at CreditCards.com.
Because of that, carrying a credit card balance is going to cost more.
“So really, what that means is that the current credit card average, which is 16.13%, that could easily be around 17% by the end of the year," Rossman predicted.
So, do what you can do now to pay down your credit card balances. And you do that by making more than the minimum payments.
“When you carry a balance and only make minimum payments, you’re going to be in debt for many, many years,” Rossman said.
For someone with the average balance right now, $5,525 (according to Experian) it would take 16 years to pay down that debt, and cost $6,160 in interest, Rossman told me.