Americans paid banks some $104 billion in credit-card interest and fees in the last year, up 11 percent on the year and 35 percent over the last five years, according to the personal-finance website MagnifyMoney, which analyzed data from the Federal Deposit Insurance Corporation (FDIC) through March 2018.
The bad news: That number will likely only rise this year. The Federal Reserve has forecast four interest rate hikes (one every three months) in 2018. The Fed has increased interest rates twice this year to between 1.75 percent and 2 percent and has penciled in two more quarter-point moves.
When the Fed raises rates, which it did in June, credit-card debt gets more expensivebecause banks often pass on those higher rates to customers. Consumers with credit-card debt will likely pay an additional $2.2 billion this year in interest payments because of the last rate hike, the credit-card website CompareCards found.
If the Fed raises rates a total of four times this year, it will create a total of $110 billion for Americans to pay in credit-card interest and fees, MagnifyMoney found.
Collectively, that’s a huge amount, said Nick Clements, co-founder of MagnifyMoney. But people making payments on their credit cards are less likely to notice than those who make mortgage payments. “Most people will only see their minimum due increase by a couple of dollars,” he said. “It’s not dramatic.”