TUES­DAY MAR­KETS

USA TODAY US Edition - - MONEY - Adam Shell

Credit-card bor­row­ers brace your­selves. The U.S. cen­tral bank is ex­pected to hike its key in­ter­est rate an­other quar­ter of a per­cent­age point Wed­nes­day. And that means higher in­ter­est rates on plas­tic.

That also means card­hold­ers soon will be fork­ing over even more money in in­ter­est pay­ments an­nu­ally, an es­ti­mated $2.2 bil­lion alone for what’s ex­pected to be the Fed­eral Re­serve’s sec­ond rate hike of the year, ac­cord­ing to the June Credit Card Debt Re­port from Com­pareCards. And if the Fed raises rates two more times this year, it will boost in­ter­est paid on credit cards to roughly $10 bil­lion in 2019, the re­port said.

At the end of March, the av­er­age in­ter­est rate charge on cards, ac­cord­ing to the Fed, was 15.32%, an 18-year high. But that ex­or­bi­tant rate is likely to go up to 15.57% within two billing cy­cles, Com­pareCards says, as lenders pass along the higher rates to clients.

Cur­rently, Amer­i­cans carry $984 bil­lion in credit card and other re­volv­ing debt, and that num­ber is ex­pected to eclipse $1 tril­lion dur­ing the sum­mer, a sea­sonal pe­riod that nor­mally sees higher lev­els of card us­age to pay for things such as va­ca­tions, day trips and other warm-weather ac­tiv­i­ties.

While an im­prov­ing econ­omy is good for the job mar­ket and worker wages, it’s bad for credit-card bor­row­ers be­cause it means higher in­ter­est costs.

There’s only two ways to limit the hit from higher bor­row­ing costs: Pay off all your credit cards in full each month or spend less on your cards so you won’t get pe­nal­ized as much for pur­chases bought with money you don’t have.

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