Arizonans would take big hit if US defaults on debt - KLTV.com - Tyler, Longview, Jacksonville |ETX News

Arizonans would take big hit if US defaults on debt

SCOTTSDALE, AZ (CBS5) -

The chaos in Washington, DC is having an impact on Arizona, as residents worry about the fallout if the U.S. government defaults on its debt.

Melissa Gamez, of Scottsdale, is in the market for a new car but that big purchase may have to wait until the crisis is over.

"It would definitely impact my decision in whether I would buy one or not," said Gamez, 26.

Economists predict a major meltdown in financial markets around the world if lawmakers don't raise the U.S. debt ceiling by this Thursday.

Interest rates could skyrocket, which means car loans and home loans would be more expensive.

A $10,000 loan at 5 percent for four years would cost $230.29 a month.

A $10,000 loan at 10 percent for four years would cost $253.63 a month.

If interest rates go up, monthly payments on credit cards would also go up.

Investments like 401ks could come crashing down.

Dennis Hoffman is a professor at ASU's WP Carey School of Business.

He said that if the U.S. defaults on its debt, seniors may have to wait for their Social Security checks and Medicare payments.

And the pain on everyday Americans wont stop there, Hoffman said.

"It's not just the Social Security recipient we are talking about," said Hoffman. "It's anybody that works for a corporation or business that finances payroll in the commercial paper market, and that's a lot of folks. A vast majority of people, frankly."

Gamez doesn't think it's right that she be penalized for the incompetence in Washington.

"They're not making a decision, so I'm the one having to pay more money," said Gamez. "It's definitely unfair."

Copyright 2013 CBS 5 (KPHO Broadcasting Corporation). All rights reserved.

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