If the nation defaults on its hundreds of billions or more in debts – and, some believe, even if it doesn’t – it may have its international credit rating downgraded, according to a report from Fox Business. There would be consequences for such a mistake, for the government and consumers alike. The biggest effect for most Americans would likely boil down to higher interest rates on any new lines of credit they took out.
“Anything new that you purchase from the point of the hike on will be impacted,” personal finance expert Lynette Khalfani-Cox told the news agency. “The existing balance you have would not be. But think about it logically how many Americans out there are carrying a balance, will they stop using those cards completely, cold turkey?”
Because of this change, many experts advocate taking steps as quickly as possible to shore up finances so that new lines of credit aren’t as necessary when and if the downgrade happens, the report said.
The changes for interest rates on credit cards and other existing lines of credit with variable interest rates would likely not take effect for a billing cycle or two, but loans and other accounts would be affected immediately, a report from CNN Money said.