Credit Card Interest Rates to Rise

Credit Card Interest Rates to Rise
Knowing your interest rate is important if you have a credit card balance. Unfortunately, this isn’t the case for many people. 41% of cardholders carrying balances didn’t know their interest rate according to a December Bankrate study. Cards currently have an average interest rate of 16%, but rates can reach 25% or even higher.
It is expected that the Federal Reserve Board will raise short-term interest rates in March in an effort to combat inflation. As those rates rise, credit card rates, home equity lines of credit and other loan products will climb as well, which means you will have to pay more to settle your debt.
You should pay off your high-interest credit cards as soon as possible without making further purchases. In the event that you receive a tax refund, and most taxpayers do, use the money to pay down debt. In spite of the refund not paying off the balance in full, the reduced amount will trim the amount of interest charged.
Another option
There is also the option of applying for a balance-transfer card. Wells Fargo, Capital One, Bank of America, and others are among the companies that offer balance transfer cards with an introductory rate of 0% for five to 18 months. If you have any current cards in your wallet, you can check for promotions related to balance transfers.
For example, Chase recently offered 0% promotional rates for transfers made by March 31 (new applications are no longer being accepted). A transfer fee of $5 or 4% of your balance, whichever is greater, applies to the 0% rate through the April 2023 billing cycle. Chase credit cards can’t be transferred from one issuer to another; the transfer must be from another financial institution or retail card.
With any balance transfer, if you do not pay your balance by the end of the promotion, any balance left over is generally subject to the card’s normal interest rate. You may be subject to retroactive interest charges if you don’t read the fine print
How to get a low credit card interest rate

How to get a low credit card interest rate
Your chances of getting approved for the card’s lowest rate will increase as your credit score improves. Several factors, including the age of your oldest credit accounts, affect the APR of your credit cards. If your credit is poor or you are rebuilding your credit, you can still lower your APR by taking certain steps. You could, for example:
- Make sure your bills are paid on time. Your ability to win a lower credit rate is greatly influenced by your record of making on-time payments. It is more likely that lenders will trust you with a competitive APR – and other favorable terms, such as a big credit limit – if you have a long record of paying your debts on time.
- Keep your balances low. Furthermore, creditors want to see that you do not overcharge and are responsible with your credit. Due to this, credit scores take into account how much credit you’re using compared to the amount you’ve been given. Credit utilization is calculated based on this ratio. A lower ratio is typically better. For instance, personal finance experts generally recommend keeping your balances below 30% of your total credit limit.
- Build a lengthy and diverse credit history. Furthermore, lenders like to see that you’ve used credit successfully for a long time as well as experience with revolving credit and installment loans. In turn, credit scores, like the FICO score and VantageScore, consider the average length of your credit history and the types of loans you have handled (known as the credit mix). Use your oldest credit card as long as possible to keep your credit history intact.
- Call your issuers. You may be able to lower your interest rate if you’ve successfully held a credit card for a long time – especially if you have excellent credit. Contact your credit card company and ask if it will lower your APR.
- Monitor your credit report. Keep an eye on your credit reports to ensure you’re getting the fairest rating. If you make a mistake or open an unauthorized account, it will affect your credit score. Each major credit bureau (Equifax, Experian, and TransUnion) allows you to check your credit report once per year for free through AnnualCreditReport.com. On account of the pandemic, the three credit bureaus will also provide free credit reports each week until April 2022.
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