Federal Reserve Raises Interest Rates; Impacts Borrowing Costs

The Federal Reserve raised its benchmark interest rate during its September meeting and indicated another increase could occur this year. This decision affects borrowing costs and savings returns for consumers, particularly impacting younger and lower-income households. Currently, Americans hold approximately $1.26 trillion in credit-card debt, and just 60% of credit card users have revolving debt, which incurs an average interest rate of over 23% annually. The recent 25-basis-point hike is projected to cost credit card borrowers an additional $2 billion in interest over the next year, which directly impacts their financial strain and purchasing power.

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