A credit card can be a powerful tool for managing your personal finances. Some things – like keeping track of your purchases – are under your control. But what can you do when your interest rate starts to climb?
Credit card Annual Percentage Rates (APR) – which are used to calculate how much interest you’re charged – have been climbing steadily in 2022 and pinching people’s budgets. Fortunately for you, you have a blog writer who has learned all about the scary world of paying up to 20% more than something’s original cost, firsthand.
Interest should be one of the main factors when choosing a potential credit card. If you carry a balance, the lower the APR, the better. Suppose you carry a balance of $5,000 on a credit card that charges 17.45% APR. At the end of 12 months – if you’re still carrying that balance -- you will have paid over $850 in interest. If that same balance was on a credit card charging 7.45% APR, you would have paid only about $360, a savings of almost $500!
The best way to avoid high interest charges:
- Pay off your credit card balance every month. If you decide to use your credit card to make a large purchase, use a card with a low interest rate and pay it off as quickly as you can – preferably within a few months.
- Make your payments on time. Late payments can trigger your account’s penalty rate, resulting in even more interest being charged.
- Transfer your credit card balance to one with a lower interest rate or pay it off with a less expensive fixed-rate signature loan. Other options may be available, too. Contact us to learn more.
Conclusion: If credit card interest is weighing you down, talk to us. We have several low-cost loan options available to get you out of the red and into the black.