Editor's note: This excerpt is taken from a story published on March 22, 2023.
CNN New York --
Wednesday's Federal Reserve hiked its key interest rate by 9% for the ninth consecutive time since March.
The Fed increases the interest rate every time, and banks tend to increase their lending rates for customers. This means that consumer debt, especially variable-rate credit cards debt, will become more expensive.
Greg McBride chief financial analyst at Bankrate.com stated that the average credit card rate has reached a record high of 20%. This is a significant increase from the 16.3% average at 2022's start.
This is not a problem if you pay your bill in full each month. If you have a balance and pay less than the minimum, you'll be paying more interest each month and will need to pay it off faster.
In just a few short statements, you can expect to see your interest rates rise.
You can find a balance-transfer card that offers a 0% initial rate. Then, make a plan for paying off the debt in the following months.
You can turbocharge your debt repayment efforts by receiving a 0% balance transfer offer. Some of these offers last as long as 21 month. McBride stated that this protects you against rate increases and gives you a runway for getting the debt paid once and for all.
First, find out the fees that you will need to pay, such as a balance transfer fee or an annual fee. Also, learn what penalties are for missing or late payments during the zero rate period. It is best to pay off your balance as soon as possible, on time each month, before the zero rate period ends. If rates rise, any balance remaining will be subject to an increase in interest rates that could be even higher.
You can transfer your balance to a zero rate card but you may not be able to obtain a personal loan with a fixed rate.
According to Bankrate, the average personal loan rate was 10.82% in March 22nd. However, your income, credit score, and debt-to–income ratio will all affect the rate you get.