Expert Warns Americans to Pay Off Credit Card Debt After Fed Rate Hike — George Kamel Says Borrowing Just Got ‘A Little Bit More Expensive’

Personal finance expert and The Ramsey Show co-host George Kamel said the Federal Reserve’s latest rate hike makes borrowing “a little bit more expensive,” and urged people with credit card debt to pay it off.

Kamel explained what the move means for household budgets in a video published by Fox News Digital on Sunday.

The Fed raised its target range to 3.75%-4%, which Kamel said amounts to about a quarter-point increase on variable rates. Fixed-rate debts already in place, such as a car loan or mortgage, are not affected.

Credit Cards and Debt

A credit card at 28% might move to 28.25%, Kamel said. The same applies to HELOCs and adjustable-rate mortgages once they reset.

“The smartest move to make if you have credit card debt is to pay it off,” he said. He advised cutting up the cards, not adding to the balance and putting extra money toward the principal, since APRs run from 20% to 30%.

He recommended the debt snowball method: minimum payments on all debts, with all extra margin on the smallest balance. That may mean budget sacrifices or working more, he said, but it is worth it.

Mortgage Math

Kamel noted that the Fed funds rate does not directly set mortgage rates, which follow the bond market. He said those rates have already priced in the hike, so a new fixed mortgage might be 6.25% instead of 6%.

On a $400,000 loan, that could mean about $65 more per month. “It’s not going to be a life-changing amount,” Kamel said, but it makes it harder for people trying to buy their first home.

Savings Get a Boost

High-yield savings accounts could get a lift in the coming weeks, Kamel said, with a 3% rate moving to 3.25%. He said banks are quicker to raise rates on debt than on savings.

“Wealthy people earn interest, broke people pay interest,” he said, adding that people should aim to be on the earning side. He said a budget helps people avoid getting “spooked” by rate headlines.

Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.

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