3 tips to manage high-interest credit
America is quickly becoming a “cashless” economy. Just 14% of U.S. consumers say they use cash for all or almost all of their transactions.1
Using credit cards is convenient. It’s easy. And that can be part of the problem. With cash, we know how much we’re spending. It’s easier to track. With credit cards? If we don’t really want to know, we don’t have to – at least until the statement arrives. That can ding your budget, especially in an environment of rising interest rates.
Current Average Credit Card Interest Rates by Category (August 2023) 2
But do these interest rates really matter?
You’d be surprised. Say you make the minimum payments on a $500 credit card bill with a 14.56% interest. You’d pay almost $145 in interest by the time the debt is paid off. BUT . . . if your interest rate is 20.09%, you’d pay over $205 in interest. That’s a $60 difference on a $500 debt over the same 43 month period.
Here are three easy tips to help you manage rising credit card rates:
• Pay off, restructure or re-finance your credit card debt. Using these strategies may result in lower monthly payments to pay off the same debt.
• Limit your credit card use. Use your card only for those expenses you know you can pay off in full each month.
• Call your credit card issuer and ask for a lower rate. Your mailbox is filled with credit card solicitations, and they know it. If your issuer wants to keep you as a customer, they may consider reducing your rate.
Once you’ve addressed your credit card debt and eliminated it or reduced your monthly payments, we can help you reallocate those funds to your balance sheet to help fund protection and wealth-building strategies. Please reach out if you’d like to hear more.
Pub12207 2023-158580 (Exp. 7/25) *pre-approved content*