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
30 Purchases That Will Start Saving You Money Immediately
30 Purchases That Will Start Saving You Money Immediately

Sometimes, you’ve got to spend to save. These canny deals are a good bet for savings.

3 Ways to Get Paid for Searching the Web
3 Ways to Get Paid for Searching the Web

If you’re already doing it anyway, why not get rewarded for it? Here are three great opportunities.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

5 Reasons You Should Retire Sooner, Not Later
5 Reasons You Should Retire Sooner, Not Later

Waiting until age 70 to retire isn’t for everyone. Could you be waiting too long?

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

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

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.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

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.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

Taking a Multivitamin? Here’s Why You Should Reconsider
Taking a Multivitamin? Here’s Why You Should Reconsider

A new study has bad news for the millions of Americans who spend money on multivitamins.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

11 Huge Retirement Costs That Are Often Overlooked
11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

7 Tricks to Cleaning Your Bathroom Faster
7 Tricks to Cleaning Your Bathroom Faster

These tips can get your bathroom sparkling with little time and no elbow grease.

20 Amazon Purchases We Loved in 2020
20 Amazon Purchases We Loved in 2020

These practical products made everyday life a little easier last year — and will do so in the new year, too.

10 Times You’re Right to Be a Cheapskate
10 Times You’re Right to Be a Cheapskate

Clever shoppers can save money without sacrificing quality. Here is how to do it.

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.