Rising interest rates may result in more debt
As a result of growing confidence in the economy, the Federal Reserve increased the benchmark interest rate by a quarter of a point earlier in March. For many Florida credit card holders, this is going to result in a potentially substantial increase in what they owe. This is because many credit cards have variable interest rates, and the interest rates are generally tied to the benchmark interest rate.
What this means is that a large number of credit card holders will see their interest rate go up, and in many cases, this occurs in as little as two billing cycles. For people who pay off their credit cards as soon as they receive a statement, this won’t mean much to them.
However, people that carry large balances could see their debt increase faster. This increase will mean about an additional $25 of interest every year for every $1,000 of debt that someone owes to a credit card company. It is estimated that American consumers will pay an additional $1.6 billion in interest on credit card balances this year alone as a result of the increase.
While there are a variety of ways that people can tackle getting out of credit card debt, some people may have more debt than they are able to pay back. In these cases, individuals may want to consider filing for Chapter 13 bankruptcy. A Chapter 13 bankruptcy is a reorganization of debt that allows people to set up a realistic repayment plan that is completed over three to five years, and some unsecured debt balances that remain could be discharged. There are eligibility and other requirements for this particular chapter that an lawyer can explain.