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How to curb credit card debt now, before interest rates rise again

With credit card debt balances within the U.S. climbing, you may want to rethink your credit card technique forward of a potential recession.

That’s as a result of credit card debt is up 13% since final 12 months, and that debt will solely get dearer as extra interest charge hikes are anticipated later this 12 months. Here’s a take a look at what you are able to do, as really useful to CNBC Make It by licensed monetary planners:

1. Pay down your credit card debt now

“This should be a top priority regardless of where we are in an economic cycle, but very important in times of high inflation and potential economic downturns,” says Kendall Clayborne, licensed monetary planner at SoFi.

That’s as a result of excellent balances have a tendency to rise with interest charge hikes. Over the previous few months, credit card interest rates have climbed from simply over 16% to 17.42%, however that may very well be nearer to 19% by the top of the 12 months, in accordance to Ted Rossman, senior trade analyst at Bankrate.com.

2. Call your credit card firm and ask for a decrease charge

One of the best methods to decrease credit card prices is to merely name up your credit card supplier and ask for a decrease interest charge. They would possibly say no, however for those who’ve been a loyal shopper with an bettering credit rating, they may say sure.

To assist your case, quote credit card provides from competing corporations if they arrive with decrease interest rates than what you pay in your current card. You may ask them to waive your annual payment, too.

3. Consider a credit card stability switch

A stability switch is if you transfer debt from one credit card account to one other for a decrease interest charge. 

Credit card corporations sometimes provide 0% interest for an introductory interval of up to 21 months. This means decrease funds, at the least for some time. But you may nonetheless want to make common funds after the 0% introductory interval expires.

Lately there are fewer provides of 0% for 21 months, however they’ll nonetheless be discovered. Just notice that you simply sometimes want or glorious credit rating to qualify, and that you simply might need to pay a stability switch payment of about 3% – 5% of the full debt transferred.

4. Get a cash-back card for those who aren’t touring a lot

The rewards for journey playing cards sometimes have good redemption rates, however that may not be price it for those who do not plan to journey a lot within the subsequent 12 months. Plus, they sometimes include annual charges.

If you are centered on making ends meet, a cash-back rewards card may be a greater choice. These playing cards do not have loads of perks, however they sometimes provide 2% – 5% cash-back on spending on important purchasing classes like groceries or fuel. These playing cards are a good way to offset a number of the prices of inflation.

5. Do a subscription audit of your credit card bills