Rate Hike Hits Vulnerable Consumers Hardest

The Federal Reserve raised interest rates for the first time in over three years by a quarter percentage point, putting its target range at 3.75% to 4%. This move aims to combat elevated inflation and bring it back down to its 2% goal.

Black consumers are particularly vulnerable to these higher borrowing costs due to their reliance on credit cards and lower household wealth. According to the Federal Reserve, 72% of Black credit card holders carried a balance at least once in 2025, compared with 40% of white cardholders.

Jayson Thornton, a financial advisor, explained that credit card borrowers will likely see the effects within one to two billing cycles, or roughly 30 to 60 days. He noted that wealth disparities contribute to this disparity, as Black households are more likely to be debt consumers rather than capital asset holders.