As the recession lifts, top economists claim interest rates have nowhere to go but up, up, up.

The cost of paying back debts has decreased for years, but now, as the national debt rises, inflation is sure to come with it, according to a recent New York Times piece.

Economists point to the housing market as the first place where increased interest rates will begin to have an impact. This is particularly disparaging news for prospective homeowners, as a 1% increase in the interest rate could increase the total cost of the home by nearly 20% over the life of the loan.

Credit cards are another area where consumers will likely see a rise in interest rates. The average interest rate on credit cards recently reached its highest rate in 10 years (14.3%), according to the Fed. That jump represents an average additional cost of $200 in credit interest per household over the past year alone. And experts predict that number will likely rise even higher.

Car loans are also on the rise. The average interest rate on a car loan has jumped 1.3% over the past three months alone.

All this is in addition to national debt issues that should cause additional inflation in the months and years to come, as companies and the government, continues to dig itself out of this mess.

Do you think there’s any way to avoid these interest hikes? What should the Fed do in the months to come to avoid another credit crisis?

Feel free to share your thoughts in the comments section below.

Source: “Interest Rates Have Nowhere to Go but Up,” by Nelson Schwartz, New York Times, 4/10/10.