“Americans’ bottom line is diminishing. Household income is diminishing because of inflation, so we will see people relying more on credit cards and loans to offset that cost,” says Natalia Brown, chief client operations officer at National Debt Relief, a debt settlement company. “It’s really going to be difficult to find loan products with low interest rates, and it’s going to be that much harder to pay back.
The issue is the Fed’s tightening is not working as intended so far and has had a “ripple effect throughout the entire economy,” says Sara Kalsman, a certified financial planner at Betterment, one of the largest robo-advisors for online investing. “It’s difficult to predict how long this inflationary environment is going to last, but a lot of folks are concerned,” Kalsman says. “This is going to directly affect consumers through higher credit card rates, higher interest on car and business loans, and eventually mortgages as well.”Every aspect of your finances is subject to the Fed’s influence.
“The average consumer doesn’t realize that there is an impact on their everyday spending,” says Brown. “When your dollar doesn’t go as far, you may not realize it until you get to the cash register.”