With inflation running rampant and on the heels of yet another interest rate increase from the Fed, life has gotten a lot more expensive. To help consumers rail against the rising cost of living, CardRatings.com issues advice for people looking to cut down on what they're paying in credit card interest.
Credit experts at CardRatings.com offer tips for pushing back against higher credit card costs with Inflation hurting your debt deletion plans? What can help.
As inflation surges, consumers could be tempted to lean more heavily on their credit cards to make ends meet. At the same time, rising interest rates have made carrying credit card balances especially expensive.
This double-whammy is a particular setback for consumers who have been working diligently to reduce their credit card debt. Inflation and higher interest rates are now eating up some of the money they had planned to put toward debt reduction.
"People who have budgeted carefully in order to pay off their credit card debt are now seeing less of that budgeted payment go toward paying down the principal balance thanks to rising interest rates,” says Brooklyn Lowery, editorial director and lead credit card analyst for CardRatings. "It’s time to make some adjustments in order to keep working toward the goal of paying down that debt and save on interest."
It's a simple formula: the lower the credit card balance is, the less interest there is. Paying off credit card balanceseliminates that extra cost completely.
Here are eight tips CardRatings.com offers to help consumers make that happen:
- Use a 0% balance transfer card while paying down credit card balance. Paying interest slows the pace of paying down credit card debt
- Ask for a lower interest rate. Credit card companies recognize that it's cheaper to retain an existing customer than it is to get a new one.
- Consider credit counseling. This may help to find ways to pay down debt faster.
- Temporarily hold off on saving programs. Saving for emergencies is important, but the truth is, credit card debt costs a lot more than is likely earned on those savings.
- Adjust spending. Higher prices may mean buying less to adjust for inflation.
- Adding to income. One cause of inflation is a labor shortage. That can be advantageous in finding a side gig to make some extra money.
- Sell things no longer need. Most households accumulate some clutter over time. Turn that into cash by having a garage sale or selling things online.
- Don't delay. Every month a credit card balance is carried forward makes it more costly. When it comes to paying down debt, the old saying is true: time is money.
"Credit card balances were already an expensive form of debt," says Lowery. "Inflationary increases to everyday credit card purchases, as well as rising interest rates, are making them more expensive. Not taking steps to reduce the problem will only make things worse. With inflation running at an annual rate of about 9%, any way consumers can find to cut what they spend on credit card interest should come as a welcome relief.”
Lowery is available for comment and interviews.
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CardRatings innovated online credit card ratings and has been offering independent ratings and reviews of credit card offers since 1998. The website collects and maintains data on more than 700 credit card offers and carefully compiles objective lists of the top credit cards by card type, making it easy for consumers to find the right card to fit their needs.