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As U.S. interest rates skyrocket, here are four ways to manage your credit card right now

Chris Taylor

NEW YORK (Reuters) – Try holding your credit card to your ear, very close. You may hear a tick, tick, tick of your interest rate rising.

Back on May 4, the average US credit card interest rate was 106 .15%, according to financial information site Bankrate. By July 6th, 11.10%. By August 17, 17. 67%.

In fact, such a ratio has hit an all-time high since CreditCards.com began compiling the data 15 Years ago. The Fed is expected to raise interest rates further to keep inflation under control, putting overall upward pressure on lending rates.

“Credit cards used to be expensive, now even more expensive now and will be more expensive by the end of the year,” said Ted Rossman, senior industry analyst at CreditCards.com.

This is obviously bad news for busy consumers. Debt piled up in the second quarter of the year.

National credit card debt increased this quarter 46 billion dollars, and 46 billion dollars year-over-year, according to the New York Fed’s new Household Debt and Credit Report.% year-over-year growth was the biggest jump 15 years.

Greater debt, coupled with higher interest rates, has put some household balance sheets in danger territory.

“Credit card rates seem to have been It’s rising, never falling,” said Ed Mierzwinski, senior director of federal consumer programs at advocacy group US PIRG. “Banks are getting away with it, and they’ve been for a long time. They raise interest rates whenever they get the chance. “

Usually rate hikes are because of floating rate cards with prime rates, so when that rate goes up (currently 5.5%) it’s passed on to the borrower. Other times, the rate hike could be Because of late or missed payments, this violates the original contract and allows the lender to reset at a higher percentage.

This upward trend in credit card rates may be difficult to push back, but you are not powerless. It’s expert advice.

Ask for a lower rate

Call your lender to see if they’re willing to accept a lower rate – they’re more likely to do so if You are a long-term cardholder in good standing, not a late payment or credit breaching person, do this.

When US PIRG tried it with a sample of consumers, 56% Reduction – Successful candidates have an average fee reduction of more than one-third.

Perform balance transfers

There’s an elegant way to drop double-digit interest rates right away: arrange for a balance transfer to a new card. Obviously you’ll still have to repay the money, but at least you’ll get an extended introductory period with 0% interest .

Now major offers include Wells Fargo (NYSE: WFC) Reflect, Citi Simplicity and Citi Diamond preferred. Make balance transfers as prudent as possible, Mierzwinski says, as closing old accounts and opening new accounts frequently puts your credit on the line The score is not ideal.

Payment exceeds minimum limit

Many cardholders simply refund the minimum amount due when they get their monthly statement. However, according to Data from the Consumer Financial Protection Bureau, you’re dealing with a lender – resulting in banks earning about 100 $1 billion in interest income annually.

For example, $,000 Debt on a credit card with an interest rate of 11 %, making a small monthly payment of $200, will cost an additional $11, individually interested over time (and take 106 months to pay off). So as much as possible above the minimum, ideally no monthly balances at all .

See alternatives

There are other than immersed in 20- The more preferable loan option in the tune %. Getting a personal loan from your bank is one solution—currently averaging about 11%, says Rothman . For people with good credit, the rate may be more like 6%. Or a nonprofit credit counseling company like Money Management International can also help you get a single loan at a lower interest rate.

Use Rewards Carefully

Cashback, Points and other programs are only available when you pay off the card in full each month significance.

“If you get a 1-2% bonus, this will be fully covered by the cost of holding the balance at an interest rate like 67 The offset -25% is even higher,” Mierzwinski said. “People are increasingly being manipulated into using their cards – credit card companies have been laughing at the banks.”

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