The game of political brinkmanship over the debt ceiling isn’t just an abstract battle of wills. If it isn’t raised, you can expect that your credit card interest rate surely will be.
As Credit.com explains, if the U.S. AAA credit rating goes down, interest rates will rise across the board, including the rate you have to pay on your favorite piece of plastic:
So if the U.S. has to pay more to borrow, the prime rate that banks pay to borrow money to lend out to consumers goes up. And guess what happens when this increase makes it all the way down the food chain to the consumer? The vast majority of credit cards have variable rates and they go up and down with the prime rate. So if the prime rate goes up, your variable rate goes up by the same amount.
More than likely, the debt ceiling will be raised by one method or another just before the deadline. But if it isn’t, “open every piece of mail that your credit card issuer sends you,” advises Credit.com. It may just contain a nasty notice about your jacked up interest rate. And if that happens, that’s just the beginning of our worries.