ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / ECONOMY & WORK

5 Ways to Pay Off Credit Card Debt Before Interest Rates Go Up

New research suggests that there may be a credit card debt crisis as more Americans miss payments and use their cards to the limit.
PUBLISHED JUN 10, 2024
Cover Image Source: Photo by Mikhail Nilov | Pexels
Cover Image Source: Photo by Mikhail Nilov | Pexels

For many Americans, using credit cards is a major issue, particularly because of the high interest rates that cause debt to accumulate quickly. The average interest rate on a credit card is currently close to 22%. It is easy for people to accumulate significant debt because of this high credit card interest rate. A possible debt disaster is hinted at by recent data which indicates that more people are skipping payments and using all their credit limits on their cards. Credit card debt is riskier to have because of the high interest rate environment. The Federal Reserve has maintained a 20-year high for its main interest rate to curb inflation, which raises borrowing costs. Since inflation is still high, predictions of many analysts that rates would decline in the middle of the year have changed. Some now think the Fed might not lower rates at all this year.

Image Source: Photo by Cup of  Couple | Pexels
Image Source: Photo by Cup of Couple | Pexels

If inflation stays above the 2% target, rates might rise even more. This would make credit card interest rates rise, worsening the debt problem. So, if you have credit card debt, it's important to pay it off now before rates possibly increase further. Here are a few ways you can pay off your credit card debt ahead of any prospective interest rate increase:

One wise strategy to manage your debt and reduce interest is to combine all of your credit card debts into a single fixed payment at a discounted interest rate. Traditional debt consolidation loans from banks, credit unions, online lenders, or debt relief agencies are your options. You use these loans to settle your credit card debt before gradually repaying the amount.

The primary advantage is that paying off your debt is more affordable because the interest rates are far lower than those of regular credit cards. To be eligible for the best rates though, you must have excellent credit. While they might still be eligible, people with weaker credit scores might pay higher rates which would lessen the savings.

An air traveller uses a credit card to pay for items at a John F. Kennedy International Airport | Getty Images | Photo by Robert Nickelsberg
Getty Images | Photo by Robert Nickelsberg

A debt management plan could assist you in becoming debt-free if you're having trouble managing your credit card debt and want to pay it off before interest rates increase. To reduce interest rates and eliminate fees and penalties, the debt relief organization of your choice will negotiate directly with your credit card providers under this plan. The agency receives a single monthly payment from you, which is then divided among your creditors until the balance is settled. Although this isn't as bad as debt settlement, there are typically costs associated with it, and initially, it may damage your credit score.

Numerous large credit card firms provide hardship programs to assist customers facing difficult circumstances. It could be beneficial to inquire about the many forms of assistance these programs provide, such as waived fees, cheaper interest rates, lowered minimum payments, and other modifications. These programs are designed to make it easier for you to pay the minimum amount due for a while, allowing you to pay off your debt more quickly until circumstances improve. Every organization has its policies regarding hardship help, and they will determine whether or not to approve you based on the details of your case.

Image Source: Photo by energepic.com | Pexels
Image Source: Photo by energepic.com | Pexels

To manage your credit card debt and prevent future high interest rates, speaking with a non-profit credit counseling organization can be beneficial. These organizations offer impartial financial counseling. Their counselors may help you create a healthier budget, recommend strategies that meet your needs, and even handle debt settlement with creditors. They can create strategies that work for you if all you need assistance with is budgeting to pay off your debt. Furthermore, for individuals who qualify, meeting with these agencies may not cost anything at all. See what they can accomplish for you by checking them out.

You must take action regarding your credit card debt, particularly if you don't want it to worsen, given the high interest rates and unstable state of the economy. You'll be safer against future rate rises that could make it even harder to pay off your debt if you create a strategy to pay it off as soon as possible. Thus, begin considering your options and select the one that best fits your needs.

MORE ON MARKET REALIST
The host was able to get the issue fixed by himself and the show went on as usual.
31 minutes ago
It's not every day that a business finds four big investors from "Shark Tank" on its side.
18 hours ago
The man got support from some, but many users also called his video a gimmick.
19 hours ago
The expert told the guest that it couldn't be considered an antique but instead, it was a collectible for the future.
22 hours ago
The host usually has the same look for every episode of the show so this new look excited many.
23 hours ago
False advertisement is a serious crime and this consumer was smart enough to check the ingredients.
1 day ago
Usually, it's one or two contestants with shocking answers during a round but this one was wild.
1 day ago
The host took the opportunity to laugh at himself after one of the answers on the board was too relatable.
1 day ago
Mishaps can happen on any gameshow but this contestant was resilient enough to finish the game.
1 day ago
It's not easy making a quick decision with cameras on you and some big money prizes at stake.
2 days ago
A biscuit jar might not sound like an ancient artifact, but the beauty of this one was not ordinary.
2 days ago
The host wasn't offended at all and said that they were really good friends.
2 days ago
The veteran co-host has been a part of the show since 1982 and stood out for her fashion sense.
2 days ago
Carey was pleasantly surprised by the contestant who looked exactly like him.
2 days ago
Although the answer wasn't on the board, the host was quick to rebuke the family.
3 days ago
The value of the guest's whole collection was more than 10 times what she had expected.
3 days ago
Even a game show host as veteran as Steve Harvey can be proven wrong on his own show.
3 days ago
This wasn't the first time that Harvey was caught off guard by a contestant's answer.
3 days ago
The host made a couple of mistakes which could have cost the contestant a shot at winning.
4 days ago
Even the correct answer might not be something the contestants on the game show agree with.
4 days ago