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08/08/2011 -
Last week, credit rating agency Standard & Poor's downgraded U.S. debt from a pristine AAA rating to AA+, citing the government's political brinkmanship in narrowly avoiding a credit default and consequential financial catastrophe.While the government was quick to defend itself against the downgrade, investors and analysts have begun debating what it will mean for world markets. Most certainly, economists expect an uptick in consumer interest rates.
Credit card holders who consistently revolve their balances will be among the first to feel the effects, John Ulzheimer, president of consumer education for SmartCredit.com, told Time magazine.
"Had the U.S. defaulted over the debt ceiling issue, economists were predicting an up to 5 percentage point increase in the prime rate," Time reports. "As it is, Ulzheimer says rates could go up 2 to 3 percent. In other words, if you have a card with a 12 percent APR today, prepare yourself to pay 15 percent by the holidays."
In the mean time, consumers and businesses alike should be diligent in reviewing their monthly statements and be sure not to let their balances get the best of them.
