Home Credit card Interest rates are rising – you should pay off your credit card now

Interest rates are rising – you should pay off your credit card now

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Interest rates should start to rise soon.

This means that carrying a balance on your credit card could cost you more.

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How high do rates go?

Credit card charge increased by $52 billion during the last quarter of 2021. According to the Federal Reserve, this is the largest quarterly increase in 22 years.

Interest rates are expected to rise soon to fight inflation. Inflation soared 7.5% last month, the fastest pace in 40 years.

Rising rates mean now is the perfect time to pay down or reduce your credit card balances.

If you pay your credit card bill in full every month, you don’t have to worry. But, if you have a balance, it will cost you more as rates go up.

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How can I save money?

  1. Pay off or reduce any existing credit card debt
    • snowball method – pay off your smallest debt first, regardless of interest rates.
    • avalanche method – start by paying off the debt with the highest interest rate first.
  2. Transfer your balance to a credit card at 0%
  3. Focus on paying off seeded card debt, not earning points or cashback
  4. Consider obtaining additional sources of income
    • a part-time job
    • reduce your expenses
    • sell stuff around the house that you don’t use
  5. Use your debit card or cash instead of your credit card
  6. Leverage your credit with a 0% credit card

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