Credit card interest rates are anticipated to increase after the Federal Reserve increased its benchmark interest rate an additional three-quarters of a point. For consumers who rely on credit cards to keep up with the increasing costs of gas, groceries, and other necessary expenses, this news does not come at a good time.
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The Best Ways to Handle Your Credit During Inflation
The cost of living has continued to rise throughout the first half of 2022, leaving many consumers struggling to make ends meet. It seems the cost of everything has skyrocketed, from groceries to gas. As a result, three in five American consumers say they are living paycheck to paycheck. Many of these individuals are relying on credit cards to pay for necessary expenses, but unfortunately, adding to their credit card debt only complicates financial problems.
Negotiating a Lower Interest Rate on Credit Cards
Paying down a credit card balance can be difficult, especially if the card carries a high interest rate. According to CreditCards.com, the average credit card interest rate in the U.S. is 16.15 percent (16.15%), and for many consumers, their interest rate is significantly higher, which can make paying off large balances very difficult. The good news is credit card interest rates can be negotiated, so long as the consumer knows how to do it.
It helps to do some preparation before contacting the credit card company. The consumer should first be aware of what his or her credit score is before making contact. The credit card company will closely examine the consumer’s credit score, as well as his or her payment history. Every consumer is entitled to a free annual credit report, which should be closely reviewed before calling the credit card company. Be aware of all missed payments or late payments in case these are brought up in conversation.
Americans Will End Up Paying $122 Billion in Credit Card Interest in 2019
It is a staggering headline, but just last year Americans paid banks $113 billion in credit card interest, according to a recent study from MagnifyMoney. That is up 12% from interest paid in 2017, and up 50% from 5 years ago. And the amount of interest is only set to increase in 2019. Credit card debt plagues consumers from all walks of life. The larger the debt, the more likely that cardholder is accruing interest.
What is causing this increase in interest? Financial analysts believe that now since a decade has passed since the big financial crisis in 2008, consumers are feeling more confident in their abilities to borrow more. As a result, the total amount of credit card debt has reached a record high, since before the recession. However, borrowers are also paying more when it comes to interest on the amounts they borrow, as banks have passed recent Federal Reserve rate hikes onto their customers.
The average APR on credit cards has gone up approximately four percentage points over the past five years. The average APR on a credit card is 16.86 percent, according to the Federal Reserve.
The problem with credit card interest is it can make paying down your debt very difficult. In fact, according to the Federal Reserve’s Survey of Consumer Finances, 40 percent of all active credit card users carry a balance from month to month on their cards.
While credit card interest can make paying down the overall balance very difficult, certain methods can help in conquering your debt. If a consumer is struggling to pay multiple credit cards, the snowball method can help in paying one card down at a time. Using this method, the consumer tackles the card with highest balance or highest interest rate. The consumer continues to pay the minimum amount owed every month on the other cards while putting all other money on the first card. Once that first card is paid in full, the consumer then takes the second card with the second highest rate or second highest balance. This process continues until all cards are paid off in full. While this method can take some discipline, it is a method with proven success.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
Credit Stress? Here are 5 Ways to Negotiate with Your Credit Card Company
Opening up a credit card statement each month can be a daunting task. However, negotiating the terms of your debt with your credit card company is not as hard as you think. If you take the right steps, you will be surprised at how eager some banks and credit card issuers are to work with you.
Here are five things to keep in mind when negotiating with credit card companies.
- Go right to the top. When you call your credit card company to negotiate the terms, ask to speak to a manager right away. Be polite and assure the representative there is not a problem. If the representative asks you if there is a way for them to help you, explain what you are trying to accomplish.
- Request a due date change. An easy adjustment to make to your credit card terms is to simply change your payment due date. Most credit card companies are willing to move the date to help increase timely payments. If you consistently make late payments, it would be in your best interest to request a more suitable date.
- Bargain for a lower interest rate. Have you been getting some competitive offers from other credit card companies? If so, you may be able to use the offers as a bargaining tool. Before you go to your credit card company, make sure you jot down all the perks, interest rates and other benefits that you would be getting if you switched cards. Your credit card company most likely will not want to lose you as a customer and will be willing to work with you.
- Request a late payment fee waiver. If you have a responsible payment history with your company, they may be willing to waive late fees. If you consistently make late payments, they will likely suggest you sign up for automatic payments.
- Negotiate to get the annual fee removed. Some credit card companies charge as much as $95 per year in annual fees in exchange for a few perks. When you signed up for your card, the annual fees may have worked in your favor because of the benefits you received as a cardholder. However, it may be time to reevaluate whether or not the benefits, such as cash back rewards and travel points, are outweighing the annual fees.
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If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.