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Month: June 2019

8 Ways a U.S. Credit Downgrade Could Hurt My Finances

8 Ways a U.S. Credit Downgrade Could Hurt My Finances

Like many Americans, I’m wondering how a U.S. credit downgrade would impact me personally. The drop from AAA to AA rating will force the government to pay higher interest on its debt, but what will be the consequences to hard-working Americans? From my financial experience both professionally and privately, here is the impact I foresee to my credit card debts, mortgage, taxes, savings and cost of living resulting from a U.S. credit downgrade.

1) Higher Interest Rates on Loans

A downgrade in the U.S. credit rating will make the U.S. less attractive to investors. The government will have to pay more for borrowing money, and the Federal Reserve will likely charge banks more for the money it lends them. Like a snowball effect, interest rates will rise throughout the economy. The standard APR on my credit cards will go up as will the interest on future loans, such as payday loans for unemployed borrowers, car loans, adjustable rate mortgages, student loans or personal loans. This will affect the economy as a whole as people spend less and companies borrow less for the purpose of growing their business.…