American credit cardholders will shell out an extra $38 in interest charges over the next twelve months as a result of today’s fed rate action. Totally Americans will see interest charges soar by $1.4 billion over the next year. Of the 78 million U.S. households that have at least one credit card, the average balance is now $7,564 and the average interest rate is 17.99%. For the third time this year the Federal Open Market Committee voted to raise interest rates. The FOMC voted today to raise its target for the federal funds rate by 50 basis points to 6.50%. In a related action, the Board of Governors approved a 50 basis point increase in the discount rate to 6.00%. Banks are expected to raise Prime Rates to 9.50% during the next twenty-four hours. About 65% of the nation’s credit card issuers adjust rates monthly, while the other half adjust quarterly. This means many cardholders will see this week’s rate hike in their June statements while others will see it in their July statements. As of year-end 1999, American consumers have racked up $462 billion in bank credit card debt and $88 billion in retail (store, gas, etc ) credit card debt.
AVG U.S. HOUSEHOLD (average credit card debt per U.S. household with at least one credit card) 1990 $2985 1991 $3223 1992 $3444 1993 $3601 1994 $4811 1995 $5832 1996 $6487 1997 $6900 1998 $7188 1999 $7564
Source: CardWeb.com, Inc.