Are Credit Card Rates Going Up

Are Credit Card Rates Going Up? Credit card rates are very important for users or customers. This is because eventually, it is the customer who pays these interests. For rates to go up or down depending on many factors.

One of the major variables that determine the movement of interest rates is inflation. Because it is almost always on the rise, so are interest rates. Users of credit cards are always at the receiving end of increases in interest rates anytime inflation rates soar high.

For example, in the second quarter of the year 2022, users of credit cards had to bare a total of 13% increment according to the New York Federal Reserve. Since the year 2003, this has been known to be the highest year over year

In recent years, the increment for credit card interest has reached up to 21.4%. According to the experts, this is going to continue to increase as inflation refuses to come down. This is an obvious happening because the Federal Reserve is not going to reduce the base rate as it seeks to combat inflation.

Issuing card companies don’t inform users of interest rates increments

One thing you must have at the back of your mind is that you will not be informed if interest rates are going up, this is one reason why you must ensure that you are paying your bills on time so you don’t have balances outstanding that will attract interest.

This is because per law, the Credit Card Act of 2009 does not mandate issuing companies to give notice of interest increments. So once prime rates are issued by Federal banks, it takes effect.

Interest rates which are paid by card users can sometimes be a huge task for them.

In 2022 alone, the interest that card users pay for using cards in the United States alone totalled USD 5.3 billion. This is an indication of how interest on credit cards can amount to, such a huge amount of money being paid by users of these cards.

In the midst of rates going up, you have to weigh your options

Listed here are a few things you can do to reduce the impact that these high rates will have on your expenses.

First, stop carrying balances over.

If you are the type who likes to delay paying your bills and the minimum amount of payment each month thereby carrying over balances, you should try to pay on time to prevent carrying over balances. This will reduce the number of interest that you pay.

One way of ensuring that you are paying on time to prevent carrying interests is to put your card on autopay. That way, deductions will happen that will prevent you from forgetting to pay.

There is enough evidence to show that 70 per cent of people who asked for a reduction in interest rates actually got their requests granted. This is something you can try. It might just work for you too.

If all of these aren’t working for you, the next best thing you can do is to seek help. One of the places to get help is to consider seeing a counsellor. You can consult any of the numerous agencies available. Some actually do this kind of counselling for free or for a very little fee. Find them through the National Foundation for Credit Counseling.

Next, consider a balance transfer to a new card

This is the next major thing you can do. This is one huge way of reducing your debt drastically. If possible, transfer to a card that has a zero per cent transfer. This is advice that has been given by experts like Ted Rossman of the Bankrate.com

If this works, you have succeeded in moving your debt to a card that enables you to not pay interest. This could give you a breather for up to 12 months, sometimes up to 21 months. You get to buy time to pay debts. The good thing is that there are a lot of zero per cent balance transfer cards on the market to choose from. Remember, it is not everyone would have this method working for them. This is because some people don’t have a good credit score, and that is one thing you will need to have a zero per cent balance transfer. And it is something you have to qualify for.

The third thing to do is to understand every detail of your card rate before applying.

If you care about interests and want to reduce how much money you would be paying, one of the things you should do is before you even apply for a card, pay attention, and take time to read and understand the terms and conditions attached to the card you are applying for. A lot of companies that give out cards promise very enticing bonuses when you apply for a card. Some go as far as giving zero per cent APR, no matter how good an offer seems, make sure you read every detail of the agreement before you sign up.

With these three tips, you will be in a good position to understand what it is that you are signing up for. You will also be in a good position to do what you need to do to reduce your interest rates.

This is because interest rates are almost always going up and it will be in your own interest to reduce how much you pay in interest on your balances.