Use cash or a debit card until your credit card debt is paid off,
What does the Federal Reserve’s decision to raise interest rates by a quarter percentage point mean for you?
For one thing, there will be a rate hike for nearly every credit card in the next few weeks, says Bill Hardekopf, CEO of LowCards.com.
Almost 90 percent of credit cards in America have variable interest rates that will increase by 0.25 percent.
In general terms, consumers will be paying about $25 in the next year for every $1,000 in credit card debt.
Hardekopf advises that consumers can do several things to minimize their credit card interest payments in 2017:
* Stop using your card until you no longer carry a balance on your account from one month to the next. The new charges you put on your credit card just add to the balance and increase the difficulty in paying off the debt. Put the card away and use cash or a debit card for your purchases until the debt is completely paid.
* Pay off the debt as quickly as possible. Pay as much as you possibly can toward the balance each month. The average credit card interest rate is currently 14.75 percent so that is the financial penalty you are paying each month. There are very few investments that are paying 14.75 percent, so if you have any extra money, use that to pay down the credit card balance.
* Make micropayments throughout the month. Many people falsely believe they can only make a credit card payment on their due date. You can actually make smaller payments, online or by mail, throughout the month which lowers your average daily balance. This, in turn, will lower your monthly interest charges.
* Consider transferring the balance to a lower interest rate card. There are a number of cards that have very attractive promotional offers on balance transfers. The Citi Diamond Preferred and Simplicity cards currently offer 21 months of 0 percent interest on the amount that is transferred. But there is a 3 percent balance transfer fee on the amount transferred. Do the math to see if this is a wise financial move for your particular situation. In many cases, this can save a significant amount of money on interest payments.
* Contact your credit card issuer to see if you can obtain a lower interest rate on your card. There are no guarantees this will be granted, but it does not hurt to ask, especially if you have been a solid customer. Explain you have offers from other competitors with lower rates but that you’d like to stay with your current issuer if you can lower the interest rate. If you are turned down by the first person, politely ask to speak to their supervisor and explain your situation again. Any lowering of the APR can be very beneficial to your financial health.
LowCards.com is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates.