How the Fiscal Cliff Could Affect Your Wallet & Retirement Fund
Written by Your 5News Team
Last updated on December 05, 2012 @ 7:22PM
Created on December 05, 2012 @ 5:15PM
As America inches closer to the dreaded "fiscal cliff", financial advisors are preparing their consumers for what could happen if we take the plunge.
"If we do go off the fiscal cliff, credit card debt could increase. It could push Americans off their own cliffs of debt if you will," said Bill Hardekopf, Financial Advisor.
Higher tax payments could force some households to rack up more money on their credit card balances. Falling off the fiscal cliff may also mean banks will tighten their lending and make it harder for you to get approved for credit.
"As banks make less profit, they'll try and make up for that lack of profit and revenue in other ways. So, we could see higher interest rates, as well as maybe some slight cutbacks in the introductory offers that issuers give when you sign up for a brand new credit card," said Bill Hardekopf.
The government's possible solution to avoid automatic spending cuts could result in a drop of 401k contributions. It's estimated that will affect as many as 64 percent of middle class Americans. That would make it harder for them to save up for retirement. Financial advisors said one way to avoid some of these potential consequences is to get rid of debt now.
"Pay down your credit card debt as quickly as possible. If you pay off your credit card balance each and every month on time, then you won't have any problems with your credit card. Issuers can raise the interest rates and it won't really effect you because you're paying off your balance each month on time," said Bill Hardekopf.
To avoid any drops in your 401k, look into IRA's and annuities as an alternate option.
For more information on credit cards, visit www.lowcards.com
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