4 Ways to Avoid Rising Credit Card Costs

Sad-looking woman staring at handful of credit cards.
Photo by Pormezz / Shutterstock.com

If you carry credit card debt, beware: It is becoming more expensive.

Chances are good that you have such debt. In fact, Americans are now collectively paying more than $100 billion a year in credit card interest and fees.

From April 2017 through March 2018, federally insured U.S. banks raked in $103.7 billion in credit card interest and fees, according to a recent Magnify Money analysis of government data.

That figure is up 11 percent compared with the same period one year earlier, and up 35 percent compared with five years earlier.

Why it’s getting more expensive to borrow

Magnify Money attributes this trend to the rise in the federal funds rate. The Federal Reserve has been steadily increasing this influential rate since December 2015, with the latest hike in June.

The analysis also shows that credit card interest rates are particularly sensitive to Fed rate hikes. For example, they rise more than twice as fast as mortgage interest rates.

With more Fed rate hikes expected, the analysis projects that the amount Americans pay in credit card interest and fees will again rise by more than 10 percent in 2019.

So, if you carry a credit card balances, you must act now to stem your losses.

Ideally, you already stave off credit card interest by paying your bill in full every month. If that’s not possible, you have four realistic options for minimizing interest payments.

Even if you don’t carry a credit card balance but you pay card fees, one of these options can help you save money.

1. Transfer your balance to a no-interest card

Getting a lower annual percentage rate (APR) will save you money every month by lowering the amount of interest you incur.

One way to get a lower rate is to find a new credit card with a zero percent APR and transfer your balance to it. You can find and compare no-interest cards using a free online resource like Money Talks News’ credit card search tool. Click on the “0% APR” category, which you will find in the menu on the left.

The hitch with no-interest cards is that the zero percent rate is generally temporary, meaning it will rise after a certain number of months. Still, many folks with debt should consider these cards.

For example, if you switch to a card with a zero percent rate that lasts for 12 months, you will not pay any interest on your debt for a year. If you can manage to pay off all your credit card debt in that time, you will avoid paying interest on that debt ever again.

2. Ask for a lower APR

Another option is to ask your current credit card company for a lower APR. I’ve done this myself in the past, and it can be as easy as picking up the phone and asking.

The worst thing that can happen is that you get a “no” — but the chances of you getting a “yes” are better, according to a survey conducted earlier this year. It found that 64 percent of credit card users who had requested a lower rate received it — with the average decrease being 5.5 percentage points.

3. Shop around for a new credit card

If the options above don’t work for you, it might be time to shop around for a new card with a lower rate.

Even if you aren’t in credit card debt but still pay credit card fees, it’s worth taking a few minutes to shop around. Credit card offerings change all the time, so there could be a great fee-free card out there for you.

A few minutes is all it takes if you use an all-in-one resource like Money Talks News’ credit card search tool. Just click on a card feature that interests you, and the tool will show you various cards with that feature. Or you can search by credit rating or card network.

4. Get out of credit card debt ASAP

Even if you transfer a balance to a no-interest card or otherwise get a lower APR, you must also tackle your debt itself, paying it down as fast as possible. This, too, will save you money on interest payments: The faster you get out of debt, the less interest you will end up paying over the life of your debt.

For more help with this step, check out “8 Foolproof Steps to Get You Out of Debt Fast.”

What’s your take on this news? Share it with us by commenting below or on Facebook.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
17 Surprising Things You Can Clean in a Dishwasher
17 Surprising Things You Can Clean in a Dishwasher

It’s often easier and faster to put these household items in the dishwasher than to clean them by hand.

Stop Overpaying for These 10 Common Purchases
Stop Overpaying for These 10 Common Purchases

The best price for many of these items is “free.”

10 Ways to Nail Savings on Your Remodeling Project
10 Ways to Nail Savings on Your Remodeling Project

Here’s how to save on your next remodeling project with discounted materials and more tips and tricks.

9 Houseplants That Remove Toxins From Your Indoor Air
9 Houseplants That Remove Toxins From Your Indoor Air

These plants may also do everything from reduce the amount of dust in your home to improve your productivity.

The 10 Best Outdoor Home Upgrades for Your Money
The 10 Best Outdoor Home Upgrades for Your Money

There’s still time this summer to make improvements to the exterior of your home. These offer the best payback.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

12 Deep Discounts Available on Amazon This Friday
12 Deep Discounts Available on Amazon This Friday

These items are steeply discounted — but the deals won’t last long.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

36 Things That Will Be Obsolete Soon
36 Things That Will Be Obsolete Soon

The writing is on the wall for dozens of things we have grown up with.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.