Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Time to Start Paying Down Those Debts Interest Rates on Financial Products from Credit Cards to Auto Loans Are Projected to Rise in 2018

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Time to Start Paying Down Those Debts Interest Rates on Financial Products from Credit Cards to Auto Loans Are Projected to Rise in 2018

Article excerpt

In light of the Federal Reserve projecting three interest rate increases in 2018, perhaps Americans who are saddled with high-interest consumer loans should put "paying off debt" high on their New Year's resolution lists.

One of the first places that borrowers will experience the shock of rising monthly payments is on their credit cards.

Credit card debt already is expensive. The national average percentage rate on new card offers climbed to an all-time high of 16.75 percent last year. Bankrate.com predicts the average rate could hit 17.15 percent in 2018 if the Fed follows through on the additional rate hikes.

"Consumers must adjust to the idea that the era of low rates is ending," said Aaron Leaman, chief investment officer at Signature Financial Planning on Mount Washington. "This is a good opportunity for people to re-examine all of their debt and make sure they have the best terms possible."

While consumers enjoyed a break for many years with historically low interest rates, rates on nearly all financial products - from credit cards to mortgages and auto loans - will move higher in 2018 as the Federal Reserve implements more normal policies.

But the flip side is that rising rates should spur a widespread improvement in yields offered on savings accounts and CD rates. Savings and money market accounts may finally start offering interest rates that come close to matching inflation, which has been running about 2 percent annually.

Gus Faucher, chief economist for PNC Financial Services Group, Downtown, said the Pittsburgh-based bank expects the Federal Open Market Committee to raise its key interest rate - which ended 2017 in a range of 1.25 percent to 1.50 percent - three times this year.

He said the rate hikes should push the federal funds rate to a range of 2 percent to 2.25 percent this year.

The federal funds rate, which stands at 1. …

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