A US debt default could spike borrowing costs like credit cards and mortgages, and 'every family should be concerned' says a consumer watchdog

• A US debt default could spike borrowing costs and should concern everyone, a consumer watchdog says.
• Democrats and Republicans have remained locked in an impasse over raising the $31.4 trillion debt ceiling.

The ongoing US debt ceiling debate should concern everyone, the head of America's top consumer watchdog told CNN last Thursday.

That's because borrowing costs on everything — from credit cards to car loans and mortgages could spike if the US defaults on its debt, cautioned Rohit Chopra, the director of the Consumer Financial Protection Bureau, or CFPB.

"It's a big worry. Every family should be concerned," Chopra told CNN.

The Democrats and Republicans have remained locked in an impasse over raising the country's $31.4 trillion debt ceiling — which means the US could run out of money as early as June 1, Treasury Secretary Janet Yellen warned Kevin McCarthy, the Speaker of the House, last Monday.

The federal government relies on debt — raised from selling bonds — for its spending. The US debt serves as a key benchmark for different types of credit, and hence, a default could have a domino effect on the domestic and global economy.

"If global investors do not think that is completely safe, all of us will end up paying for it," Chopra told CNN, referring to the US government debt. "A lot of things we assume are part of our financial fabric would get ripped away," he added.

Chopra's comments joined similar warnings from experts such as Jamie Dimon, JPMorgan Chase's CEO, and other Wall Street executives over the dangers of not raising the US debt ceiling.

The debt ceiling impasse has even elicited some Hail Mary pass solutions. Some economists even touted a trillion-dollar coin platinum coin that could be deposited to pay off the debts until a more permanent solution emerges, Insider's Juliana Kaplan and Ayelet Sheffey reported.

Dimon told Bloomberg TV in a Thursday interview that a default "is potentially catastrophic." While Dimon said he doesn't expect the US to default on its debt, investors could get jittery closer to the deadline should the situation remains unresolved.

"The closer you get to it, you will have panic," Dimon told Bloomberg. "Markets will get volatile, maybe the stock market will go down, the Treasury markets will have their own problems."

The CFPB did not immediately respond to Insider's request for comment sent outside regular business hours.