DENVER -- The Federal Reserve is set to raise interest rates again in June. Most people thinks that only impacts the real estate market but if you have credit card debt, that will change things for you, too.
"If your credit card has a variable interest rate on it, it's going to rise," financial planner Debbie Freeman said. "You're going to see it impact your minimum monthly payments."
The FED normally only raises the rate by a quarter of a percent at a time. But by the end of the year that could reach a total of a full percentage point.
The average Coloradan in 2016 had $6,323 of credit card debt according to ValuePenguin.com. The average credit card interest rate sits at 16 percent.
That means this FED increase could end up costing you an extra $6 per month in interest, more than $80 per year, and snowball to more than $400 over five years.
"So yes, it will take you longer to get out of that debt," Freeman said.
Some tips from the experts:
- Ask your credit card company for a lower interest rate
- Pay off your credit card with the highest interest rate first
- Target one debt at a time
"I am a big advocate of automating your payments to your credit card companies. That avoids the temptation of reducing it each month to have more discretionary spending," Freeman added.
The Colorado Banker's Association has more financial tips here.
If you are severely in debt and need expert help, Colorado has this resource to help guide you to get out of debt.