James Cramell and Lara Bonatesta
28 minutes ago
(WHTM) – We’ve been watching interest rates rise for months. It does not make up for already high credit card interest rates.
If you’re not careful, you can end up with a lot of debt.
“Average interest rates on credit cards are the highest they’ve been in years,” said financial lawyer Leslie Tain.
In addition to recent interest rate increases, paying off credit card debt is becoming more difficult.
“Credit card debt is on the rise right now. It’s doubled since last year, and with that, in my practice, we’re seeing so many people who are once again struggling – consumers. “I’m seeing it coming,” she said.
Tine says it’s easy to fall behind.
“If you’re taking out debt on a revolving credit card to make purchases in the 20% to 27% range, everything you buy and don’t pay off will be subject to 20% to 27% interest. “Think about it. That’s a huge amount of money for the consumer at that point, and anything you buy on credit but don’t pay off ends up carrying a huge interest balance,” she says. said.
Tine said people who are starting to drown in credit card debt should stop and reevaluate how they use their credit cards.
“If you have multiple credit cards or are starting to realize that you can’t pay off your credit card debt, it’s time to stop and look at what you’re actually putting on those credit cards.” Tain says. .
Then limit the use of those cards.
“Many consumers use credit cards to supplement their income because when they don’t have cash, they think, ‘Okay, I’ll just put it on a credit card.'” Please make sure not to. ”
Tine says to think carefully about your budget. If you know you can pay for your purchases, use a credit card.
Many benefit ads are important for building trust. But the important thing is to use them wisely.
“I often see clients come to me with 10, 15, 25 credit cards. So I have a lot of store cards, I have a lot of credit cards, and I can’t just say no. , in some cases the discount may not be worth pulling out a credit card. Every time you open a credit card, there will be a hard inquiry on your credit report…a hard inquiry will certainly take a toll on your credit. , which will lower your credit score,” Tain said.
Tine said it’s okay to have some credit card debt as long as you can manage it.
“The challenge with carrying a balance is when you have too many credit cards to keep up with, or when you want to pay them off all at once but can’t and you’re just on the verge of paying them off.Minimum Payment The amount,” she said.
Instead of relying solely on credit cards, look for alternatives.
“Right now is a very good time to put your money in an interest-bearing savings account. The benefit of high interest rates is that savings accounts have very high interest rates and can earn you money. When you park your money in a bank, you’re not making any money at all, you’re actually losing money in many ways,” Tain said.
You may also consider a balance transfer card to pay off your debt faster.
Another option is to consolidate credit card debt into a low-interest personal loan.
Do your homework and find out which one is best for you.
