The Debt Downgrade & Your Credit Cards

As you are well aware, last night our country’s debt was downgraded from AAA to AA+ by Standard & Poor’s, who is considered to the leader for sovereign debt among the big 3 credit rating agencies. I am already receiving emails and messages are being posted on the forum asking what this will mean for credit cards. The truth is no one knows, not yet at least. This is the first time in history U.S. sovereign debt has ever been anything below the highest rating.

At this point in time, it’s a wait and see game to find out what happens next. There are those who shout calamity, and others who feel higher interest rates are unlikely. On the bright side (if there is such a thing in times like these) the U.S. debt situation may be ugly, but the consensus seems to be that it is the least ugly among the sovereign debt alternatives. After all, no one wants to park money in the euro given what we’ve been seeing in Greece and Italy. So there’s no denying this downgrade is a major blemish to our country’s reputations, but hopefully, the realized economic impact will not be as severe as many have predicted.

As to how this will play out with your credit cards, I will keep you in the loop over the coming days and weeks as to what happens.

August 6th, 2011

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Get Out of Debt Guy

Creditors love opportunities to raise interest rates. I’d be very surprised if we don’t see a small rate increase at least blamed on economic uncertainty.