Owe money on your credit card? Here's how a Fed rate cut could impact your payments.

Thanks to the double-whammy of inflation and higher interest rates, Americans have amassed a $1.1 trillion mountain of credit card debt. Borrowers who are carrying balances may soon get some modest relief if, as widely expected, the Federal Reserve on Wednesday moves to lower interest rates for the time since 2020.

On September 18, the central bank is expected to reduce its benchmark rate, which stands at its highest point in 23 years. Although economists agree that the Fed will reduce rates this week, experts are mixed on whether Fed will kick off a cycle of monetary easing with a 0.25 percentage point cut or a larger 0.5 percentage point reduction designed to guard against recession risks, according to financial data firm FactSet.

Millions of consumers have racked up credit card debt in recent years as more families have relied on plastic to pay for household expenses amid price increases for everything from groceries to rent. While inflation has now cooled to below 3% on an annual basis, people who are carrying credit card balances are getting socked by historically high annual percentage rates, which make it harder to dig out from debt.