The Latest Personal Finance News for March 2023

A woman sitting outside reading the news.

Here's what's happening in the personal finance space this month, how it might impact you and what you can do about it.

Credit Card Debt and Interest Rates Are at an All-Time High

Bouncing back from a steep decline at the beginning of the pandemic, credit card debt has reached an all-time high, according to the Federal Reserve Bank of New York. In its most recent report, the bank says that total credit card debt in the U.S. hit $986 billion in December 2022―that's an increase of $61 billion from the previous quarter and $130 billion year over year.

Credit card interest rates have also reached a record high since the government began tracking them in the 1970s. In the fourth quarter of 2022—the latest data available—the average rate for all cards was 19.07%. The previous high was 18.9% in 1985. Experts expect the average rate to exceed 20% for the first time in 2023.

Why It Matters

American consumers have more credit card debt than ever before, and it's more expensive than it's ever been. With fears of a looming recession this year, some cardholders may wind up missing payments they can no longer afford, which can have a negative effect on their credit.

What You Can Do

Consumer Financial Protection Bureau Proposes a Rule to Rein in Credit Card Late Fees

The Credit CARD Act of 2009 banned excessive late fees on credit cards, but card issuers are still allowed to charge as much as $41 for a missed payment, according to the Consumer Financial Protection Bureau (CFPB).

Now, the federal agency has proposed a rule to limit late fees to just $8, dropping the automatic annual inflation adjustment for the fee and banning late fee amounts above 25% of the required payment. The CFPB is currently taking comments from the public on the proposals.

Why It Matters

According to the CFPB, the proposed rule could save Americans as much as $9 billion each year.

What You Can Do

Inflation Expected to Remain High

After a brief dip in prices in January, the Bureau of Labor Statistics reported an increase in February of 0.4% for all items in the core Consumer Price Index (CPI), which excludes volatile food and energy, from the previous month.

Year over year, prices were up 5.6%, down from the 40-year high of 6.6% recorded in September 2022, but still far from the Federal Reserve's target of 2%.

Unfortunately, the Federal Reserve Bank of Cleveland expects the core CPI to increase again in February by 0.45%.

Why It Matters

Further increases in the inflation rate could increase the odds of an economic recession and impact household budgets. Additionally, the Federal Reserve has signaled that it will continue to raise interest rates to combat inflation, making borrowing more expensive.

What You Can Do

Federal Reserve Expected to Raise Interest Rates Again in March

As inflation continues to persist, the Federal Reserve is expected to raise its federal funds rate once again in its March meeting.

In fact, analysts at both Goldman Sachs and Bank of America have said they expect the federal agency to hike its rate three times this year, up to a range of 5.25% to 5.5%—the rate is currently 4.50% to 4.75%.

Why It Matters

The federal funds rate indirectly influences the interest rates lenders charge on short-term debts, such as credit cards, personal loans, auto loans and even adjustable-rate mortgages.

Rising interest rates can tamp down borrowing and spending, which can help bring down the inflation rate. But it also makes borrowing more expensive for consumers, whose debt has reached record levels.

What You Can Do

Recession "Soft Landing" Remains a Possibility

The U.S. economy has not yet entered into a recession, at least as determined by the recession-watchers at the National Bureau of Economic Research, but many experts believe a recession is likely to begin in 2023.

That said, some economists believe that the U.S. could experience what's called a soft landing, meaning that the recession would have less of an impact than experts and consumers have feared.

As evidence of the possibility, economists point to the Federal Reserve's efforts to reduce borrowing and spending through higher interest rates, as well as the record number of job openings, which reached 11 million in December. The hope is that instead of eliminating existing jobs, employers would cut job vacancies to maintain a low unemployment rate.

Why It Matters

An economic recession can have a sweeping effect on consumers, resulting in widespread job losses, reduced spending power, business closures and more. While a soft landing is possible, consumers should still be prepared for a worse outcome.

What You Can Do

March Is Women's History Month

In 1987, Congress declared March to be women's history month. This is a good time to celebrate and learn about the vital role women have played in U.S. history, and it's also a good time to remember the challenges women continue to face, particularly when it comes to finances. The following articles can help you learn more:

Good Credit Can Contribute to a Healthy Financial Plan

While there are aspects of your financial situation that are outside of your control, building and maintaining a good credit score can help you weather challenges and save money in the long run.

With Experian's free credit monitoring service, you'll get access to your FICO® Score and your Experian credit report. With this information in hand, you can gauge your credit health and target areas of your credit profile that you can improve over time. And with real-time alerts whenever your report is updated, you can spot potential issues and fraud and address them quickly.