The Federal Reserve ended its streak of 10 consecutive interest rate hikes on Wednesday and decided to keep rates steady. Even so, consumers may not feel celebratory as they reel from the earlier aggressive rate increases.
Any pause should be welcomed by consumers, but for many, damage has already been done. Two in 5 people say Fed rate increases are forcing them into more debt rather than forcing them to pay off debt, according to an online WalletHub survey May 29 through June 2. More than 25% of respondents said their jobs are at risk if the Fed continues to raise rates, and 44% are upset about prospects of further rate increases.
Consumers already will pay $33.4 billion in extra interest charges over the next 12 months as a result of the Fed’s 500 basis points in rate increases from March 2022 to May 2023, WalletHub said. In part because of inflation and high interest rates, total household debt in the first three months of the year increased by $148 billion to $17.05 trillion, and the share of current debt becoming delinquent increased for most debt types, according to the New York Federal Reserve.
Medora Lee | USA Today