FERNDALE, Mich. (WXYZ) — This rise in interest rates has significant implications for all of us. Especially, when it comes to swiping your credit card.
“I am using my credit card more right now and I'm in a spot where I may not be able to pay it off for this month,” said Linda Parton, Ferndale resident.
Like many of us, Linda Parton says she found herself swiping her credit card more and more as inflation rose this last year.
Consumer prices have gone up 8.3% in the past 12 months, now that interest rates are rising again.
“It’s not going to be good, the economy isn’t very good right now,” Parton admitted.
So, what does a “.75%" increase in interest rates look like for you?
If you are carrying a $5,000 balance on your credit card, your rate has already gone up dramatically this year costing you about $870 in interest.
With a ".75%" raise. That amount will jump to $907.
“We’ve risen interest rates four times this year, it hasn’t slowed inflation,” said Rick Bloom, President of Bloom Advisors.
RELATED: In the market to buy a home? Figure out your monthly mortgage using this calculator
“That’s why it’s so important for the average person in this environment, get ahold of your expenses,” Bloom added.
Bloom suggests doing that by going through your credit card statement and seeing where you spend your money, then make cuts.
“Look for ways to be more efficient, as an example you see people with three or four streaming services and they’re not using them anymore. So, why are they paying monthly fees?” said Bloom.
“You do not want to go into debt in this environment because interest rates will kill you.”
Bloom says if you can’t pay off all your credit card debt, look at refinancing options, and if you have to use money from your 401k to get that debt down. Do it.
He says interest rates will most likely continue to rise. Bloom believes they have to slow inflation because it's slowly crushing small businesses, like Monty’s Grill on Woodward.
7 Action News asked Monty’s Grill if they have raised prices because of inflation.
“We did, we did, two times,” said Barta, waitress, mother of owner, Monty's Grill.
“Sometimes, I feel like crying because they can’t afford to eat the breakfast here,” said Barta.
As far as when rates will stop rising and the economy will turn around? Bloom says no one knows.
It will most likely take many more interest rate hikes to slow inflation. As a result, Bloom says it’s imperative that we are aware of where our money is going.
“What you can’t do is put your head in the sand. You have to be proactive these days,” said Bloom.
“I hope everything is going to get better and we hope we find (a) solution for this,” Barta said.
One positive side-effect of interest rates rising is that your savings account interest rate will rise as well.
