Think sky-high inflation won’t have an impact on your credit card debt? Think again—the combination of higher prices and rising variable APRs that come with inflation is pushing credit card balances even higher. Luckily, there are some simple ways to fight the effects of inflation and free yourself from credit card debt. Read on to learn all the basics you need to know.
How Does Inflation Affect Credit Card Debt?
It’s no secret that the United States is in the midst of a period of severe inflation. From dairy products to clothing and everything in between, the price of just about every product or service continues to increase at an alarming rate.
If you’re like most Americans and you use credit cards to make purchases, you’re likely seeing your debt climb higher. Not only are consumers paying more for the goods and services they need, but variable interest credit card rates are climbing higher thanks to the Federal Reserve’s hike on target interest rates.
In 2022, the Fed raised the target interest rate four times, with more likely on the way. Credit card companies pass these higher interest rates to their cardholders, raising the annual percentage rate (APRs) on credit cards.
Every increase in APR leads to additional interest costs on any credit card balance you carry from month to month. For example, 2022’s 2.25% rise in interest rates would cost an additional $22.50 in interest for every $1,000 in credit card debt a person holds—and it adds up fast.
While it’s best to pay off your credit card balance in full every month, that option simply isn’t feasible for most Americans. No matter how much debt you carry, paying off credit card debt fast is the best way to prevent inflation and higher interest rates from compounding your debt. Consider the following strategies as you work toward paying off credit card debt.
How to Pay Off Credit Card Debt Fast
If you’re like many Americans, inflation and higher interest rates are increasing your overall credit card debt month after month. Some of the best methods for paying off credit card debt quickly include:
- Balance Transfer Credit Card: For some consumers, opening a balance transfer credit card is a good way to avoid high-interest credit card debt. Many of these cards feature a 0% introductory APR on transferred balances for an initial period. It’s a great way to buy yourself some extra time to pay off debt without interest.
- Personal Loan: While personal loans typically aren’t interest-free, they often carry lower interest rates than credit cards. It may make sense to combine multiple high-interest cards and use a fixed-rate debt consolidation loan to pay them off in single monthly installments.
- Debt Relief Plans: By working with a credit counselor who is certified by the National Foundation for Credit Counseling (NFCC), you can create a plan of action to pay off your debt with no loans and no hidden fees. NFCC’s nonprofit credit counseling services can connect you with a counselor who can help – often at little to no cost to you. From consolidating bills and fostering better money habits, you and your Certified Credit Counselor can create a solid plan for a better financial future.
Call NFCC Today—No One Is Turned Away
Inflation is hitting Americans with credit card debt hard. If you need an action plan to manage your debt, the Certified Counselors at NFCC can help. Call us today at 800-388-2227 to get started—no one is turned away!