The title of this CNBC.com article says it all, “40% of Americans with credit card debt don’t know their interest rate, survey shows.” Are you a part of this forty percent? Many people do not want to face their financila reality. It seems easier to make the minimum payment (or perhaps even more than the minium) without paying attention to how much interest is being racked up each month.
Knowing how much you are paying in interest might motivate you to work towards eliminating your credit card debt faster. Sometimes people are advised to pay off the card with the lowest interest rate first so they can gain momentum as they tackle their debt.
Being aware of the interest rate you are paying in previous purchases can also help you cut down on spending. Sometimes not knowing can be one more thing that keeps us in denial about our financial outlook.
The article explains that “The average credit card rate is 16.3%, according to Bankrate.”, adding that the Federal Reserve plans to raise interest rates this year so consumers can expect rates to go higher than that. This will only increase your credit card debt.
CNBC.com suggests trying to transfer your debt to a credit card with a zero interest rate, noting that it is easier to get these cards this year than it was in 2021. Once your debt is transferred to a zero-interest rate. card or to one with a lower interest rate, you can work towards paying off your debt while accruing less interest.
The article also suggests waiting until you are debt-free before trying to get a credit card for rewards. The idea of rewards can be very attractive but they are not a priority. If you have a credit card balance you might want to focus in tackling your debt instead of trying to earn rewards.