If you haven’t been paying attention to credit card rates, you may be wondering why your credit card debt keeps piling up. One simple answer may be the fact that interest rates have been on the rise. Many credit card holders are unable to pay their balances in full and are instead carrying credit card debt balances from month to month. With higher interest rates, Americans are getting deeper into credit card debt, which could prove very costly.
According to TransUnion, an American consumer credit reporting agency, credit card balances reached a record high of $866 billion in Q3 2022, representing a year-over-year increase of 19%. The average credit card interest rate in America on January 10, 2023, as reported by The Balance was 22.70%. Certainly, higher Annual Percentage Rates (APRs) can make carrying card balances from month to month more expensive.
Use an online credit card payoff calculator to see how your interest builds
Using an online credit card payoff calculator will not only help you determine how long it will take you to pay off your credit card debt but also how much interest it will cost you over time. A payoff calculator can be eye-opening to just how fast interest builds.
For example, if you have a credit card balance of $8,000, your credit card APR is 22%, and you make a $300 payment each month, it will take you 37 months to pay off the balance. This is only if you don’t add on to the balance. Furthermore, you would be paying a total of $3,078 in interest over that time period for a total of $11,078 paid. That’s a significant interest payment.
Save by Transferring CC Balances to Benchmark VISA Credit Card
With Benchmark FCU’s VISA Balance Transfer Credit Card, you can get out of debt faster and save on interest by benefiting from a competitively low-interest rate, as well as no annual card fee. Tap to learn more or apply for a VISA Balance Transfer Credit Card.
Finally, keep in mind that people with higher credit scores typically qualify for lower interest rates. You can improve your credit score by:
- Paying all of your bills on time each month.
- Checking your credit report for errors and correcting those errors.
- Paying down your credit card debt to keep your credit utilization ratio low.
Learn more helpful tips like this by reading our blog, “7 Credit Card Mistakes to Avoid.”
*APR = Annual Percentage Rate.