Swiping your credit card has now become more expensive than ever, and it’s because credit card interest rates are rising crazy fast. That’s why we think you should call your credit card company and ask for a better rate — pronto.
We’re serious about this! But first, let us explain:
Your credit card’s interest rate, also known as an APR, has probably gone up just like all the other credit cards have. (Most credit cards have a variable rate.) Have you checked lately? If you have an unpaid balance, your card is probably charging you a surprising amount of interest on it right now.
Suddenly our credit cards are bleeding us dry. Here’s how fast rates are rising.
As recently as 2017, the average APR on a credit card was lower than 13%, according to the Federal Reserve. Then, from 2018 to the start of 2022, it usually hovered around 14.5%. But over the past year it started climbing with breakneck speed, and now the average APR has climbed above 20.6% — the highest it’s ever been.
You don’t have to sit still for this. Just take a little initiative and call your credit card provider.
Don’t be chicken. The phone number for customer service is right there on the back of your credit card.
You have nothing to lose!
If you want to whip your finances into shape, start with improving your credit score. Here are 10 moves to make your credit score soar.
Just Ask for a Lower Rate
Look at your latest credit card statement. Check your credit card’s interest rate. If you have more than one credit card, check all your cards.
If you’re unhappy with your APR, ask for it to be lowered. Do this for each of your cards.
A few things to keep in mind:
- If you have a history of making your monthly payments on time, make sure to mention that.
- Are you getting any offers in the mail from other credit card providers? Make sure to mention that, too. Your credit card company doesn’t want to lose your business.
- Do a little homework before making that call. See if you can find a better offer for a comparable credit card — one that’s roughly similar to yours.
- If you’ve had the same credit card for a long time, mention what a loyal customer you are.
The worst thing they can do is say “no.” Big deal.
How to Pay Off Credit Card Debt
It’s worth trying this because credit card debt is the most expensive kind of debt you can have. Credit cards charge you higher interest than mortgages, car loans, personal loans or lines of credit.
Most credit cards have a variable interest rate that follows what the Federal Reserve does, and the Fed keeps raising interest rates in an effort to fight runaway inflation. That’s why you can expect your credit card APR to go up, not down — at least for now.
If possible, the best thing you can do for yourself is to avoid leaving an unpaid balance on your credit card, month after month. Those interest payments add up.
We have a whole guide for how to pay off credit card debt.
Here are three strategies to consider.
- Get a balance transfer credit card. If you have good to excellent credit (typically a FICO score of 670 or above) and can feasibly pay off your debt within a year, a balance transfer credit card is a solid option. Transfer the balance of a card with a high interest rate to a card that’ll charge you 0% interest for 12-18 months.
- Get a debt consolidation loan. If you get a loan with a lower interest rate and pay off your credit cards, that lower rate could potentially save you thousands of dollars in interest. This is a realistic way to pay off credit card debt if you currently have little or no money to put toward it. It’s easier than you think to get a personal loan online or from your bank. If you’re a homeowner, you might think about a home equity loan.
- Follow a debt repayment strategy. Two popular ways to break down debt repayments are the debt avalanche and debt snowball methods. Using the debt avalanche method, you’ll pay off your highest interest card first. With the debt snowball method, you’ll pay off the smallest balances first.
Remember, don’t get stuck in the credit card trap. Nowadays, swiping that plastic is pricier than ever.
Mike Brassfield ([emailprotected]) is a senior writer at The Penny Hoarder.
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