Credit Card Debt is Getting Expensive, Here are Various Ways to Pay Less Interest

It’s no secret that credit card debt is growing at an alarming rate. A study done in 2021 showed that the average American has more than $5,000 in credit card debt. With rising interest rates and inflation, it might feel like getting out of debt is harder than ever. Luckily, there are still things you can do to ensure you both get out of debt quickly and save yourself thousands of dollars in interest. Here’s what you need to do.

Why is debt becoming more expensive?

There are a few reasons why debt is becoming more expensive. For one, interest rates are on the rise. According to The Wall Street Journal, the average credit card interest rate has been hovering around 17% for the past several years. Now that the Federal Reserve is raising interest rates, financial experts anticipate that interest rates on credit card balances will also rise. Another reason debt is becoming more expensive is inflation. Over the past few years, prices have increased faster than wages meaning that the value of your paycheck doesn’t go as far as it used to. When costs increase and wages stay stagnant, things become more expensive to purchase, and getting into debt becomes easier.

What can I do to lower my credit card interest rates?

You can do a few things to lower your credit card interest rates. First and foremost, make sure you’re using your credit cards responsibly and only for necessary expenses. If you’re carrying a high balance from month to month, creditors will see that as an indication that you’re not taking care of your finances and will hike your interest rate accordingly. Second, be proactive about paying off your card balance in full each month. This will reduce the amount of interest you’re paying and help you save money on interest over time. Finally, make sure to apply for credit counseling if you’re struggling to manage your debt and feel overwhelmed by it. Credit counseling can help you develop a plan to pay off your debt more quickly and with less interest and identify potential financial pitfalls that could lead to further debt accumulation.

How can I avoid paying more interest?

1.Consider using debt consolidation loans. A debt consolidation loan can help you combine multiple credit cards into one low-interest loan. This can reduce your overall interest payments and make it easier to get out of debt.

2. Use 0% APR balance transfer options. Many credit cards offer 0% APR balance transfer options for a set amount of time, which can help you reduce your interest payments even more. Just remember to try and tackle your debt before the promotional time frame runs out.

3. Keep your spending under control. If you’re unable to pay off your debt using the above methods, it might be good to cut back on your spending. This will help you save money on interest and make it easier to pay off your debt quickly.

4. Consider refinancing your debt. If you have high-interest debt, refinancing might be a good option. This can help you get a lower interest rate and could potentially save you thousands of dollars over the life of your loan.

5. Try using a debt repayment strategy. One of the biggest reasons so many accrue debt is that they don’t understand how to create a strategy to pay it off. There are dozens of popular methods for debt repayment plans, such as the Avalanche or Debt Snowball methods. Each strategy works by tapping into your inherent motivations to make it easier for you to pay off debt.

The bottom line

Credit card debt is hard to get out of but not impossible. Now is the perfect time to start chipping away at your debt before the next round of interest rate hikes. There are a variety of methods available to help you pay less interest and save money in the long run, so start planning your debt repayment strategy today!