by Bob Brooks
July 15, 2014
Interest rates are on the rise. Guess who gets the biggest benefit? The credit card companies stand to make big profits as their rates go up as well. Remember credit card rates in the vast majority of cases are not fixed. They can increase.
Cardhub.com in their recent credit card survey states that interest rates have increased an average of 1.18% since this time last year. Unfortunately, that is a trend that is likely to continue. So what is the average consumer who is carrying credit card debt supposed to do?
1. Take inventory of your debt
Most consumers don’t know how much they are paying in interest much less the other important aspects of their debt. You don’t know that you have a problem until you find out. If your credit card rates are in the teens, you might want to take some action to get them lowered.
2. Take advantage of the balance transfer –
Credit card companies are offering attractive offers where you can transfer your debt to lower interest rate cards that include 0% as an introductory period. They key is to wait and watch for the deals during the 4th and 1st quarters. According to cardhub.com, that is when the deals are the best. These deals tend to be seasonal and not offered year round. Only warning – no the terms and conditions of the deal and all fees associated with the card.
3. Make sure that your credit score is as good as you can get it
Improving your credit score is not rocket science. Make sure everything is correct on your reports. Have anything that is negative and over 7 ½ years old removed. Those are the two main items. For an extensive list, read my book Deceptive Money. Better credit scores means better rates.
4. If you have good credit, don’t settle for higher rates
If you credit score is good, don’t accept interest rates given to those with lower scores. I have come across many offers that award people with great credit double digit interest rates. Shop around and understand the best deals. For some of the best credit card deals, visit www.penfed.org.
5. Watch out for credit cards with big reward programs
In most cases, higher interest rates go along with bigger reward programs. American Airline Advantage has an interest rates of around 17%. However, you get better rewards. Incidentally, Cardhub.com also reports that “points and miles-based rewards bonuses are at an all-time high in terms of values.
Remember, that interest represents the cost of holding debt. Always make sure that you are paying the lowest costs.
For more information about everything you need to know to get out of debt, read Bob’s book Deceptive Money.