: How the Federal Reserve’s rate hike impacts your holiday spending plans: ‘It’s not the time to overspend’

by | Nov 2, 2022 | Stock Market

It is three weeks before Black Friday, but the Federal Reserve is about to make the post-holiday debt hangover a little more intense. The central bank made a widely expected move Wednesday, adding another 75-basis-point increase to a key interest rate as it tries to box persistently high inflation rates.

By the time the latest rate hikes filter through the very rate-sensitive credit card industry and pump up customers’ annual percentage rates a little more, experts say it will be some point in December 2022 or January 2023. Right in time for many holiday gifts and expenses to post on credit cards bills — and there to make the costs of a carried balance a little extra expensive. Every year, many people accumulate credit card debt through the holiday season, pay it off in the early part of the following year and then repeat the process. What’s different now is the presence of four-decade high inflation, coupled with fast-rising interest rates that the Fed hopes will ultimately cool those rising prices, although without sending the economy to a recessionary thud. Wednesday’s rate move is the fourth straight 75-basis-point rate hike to the federal funds rate, taking it to the 3.75% -4% range, when it was near zero last year’s holiday season. By now, Americans are all too acquainted with 2022’s fast-rising interest rates. They just haven’t gone through a Christmas and Hanakkuh with it yet. “It’s not the time to overspend and have a problem with paying your bills later. We know the economy is sending mixed messages,” said Michele Raneri, vice president of financial services research and consulting at TransUnion
TRU,

Article Attribution | Read More at Article Source

Share This