Raising interest rates takes money
from those who work for a living and puts it in the pockets of those who
own (and loan) for a living.
A 1% rise in interest rates will cost a family earning
$25,000-$50,000 a-year with mortgage, installment and credit card debt
an additional $569 a-year in interest payments.
A family earning $50,000-$100,000 a-year with similar
debts will pay $887 in additional annual interest.
Figured nation-wide, the dollar flow from borrower to
lender is simply stupendous:
Credit Cards: Half the current $600 billion in
credit card debt is on a variable rate basis. A 1% rise in interest rates
would mean an immediate $3 billion a-year increase in interest payments
to the money lenders.
Home Mortgages: Variable-rate home mortgage debt
currently totals $1 trillion.
A 1% rise in interest rates would cost consumers an additional
$10 billion in interest payments in the first 12 months. (Consumers would
immediately pay an additional $1 billion a-year in interest on home equity
loans.)
The National Association of Home Builders estimates 10
million families would be forced out of the market for moderately-priced
homes if interest rates on 30-year fixed mortgages rose from the current
average 8% to 9%.
Student loans: Rates are pegged to the annual yield
on Treasury bills. When that rate rises, so does the cost of student loans.
Car Loans: Thanks to higher interest rates last
year, commercial banks and finance companies pocketed an additional $106
to $142 on the average auto loan.
Job Loss: Higher interest rates also raise the
price of U.S.-made goods, eliminating jobs in export-sensitive industries.
Source: Consumer Federation of America and the Financial
Markets Center.
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