{"id":358562,"date":"2020-06-29T17:39:01","date_gmt":"2020-06-29T23:39:01","guid":{"rendered":"https:\/\/www.creditrepair.com\/blog\/?p=358562"},"modified":"2022-01-20T20:46:18","modified_gmt":"2022-01-21T03:46:18","slug":"getting-rid-of-high-interest-credit-cards","status":"publish","type":"post","link":"https:\/\/www.creditrepair.com\/blog\/credit-card\/getting-rid-of-high-interest-credit-cards\/","title":{"rendered":"Getting Rid of High-Interest Credit Cards"},"content":{"rendered":"\n
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Disclosure regarding CreditRepair.com’s editorial content. <\/a><\/em><\/p>\n\n\n\n

Whether you\u2019re looking to reduce your debt or you want to position yourself to build wealth for the future, paying off high-interest credit cards is a good move. The U.S. Securities and Exchange Commission points out that no investment strategy pays as much<\/a> return as getting rid of your high-interest credit card debt does. That\u2019s because if you invest your money, you\u2019re very unlikely to make as much as the 18% or more you\u2019re paying on high-interest credit card debt.<\/p>\n\n\n\n

But what are high-interest credit card rates? And once you identify that your card comes with a high interest rate, how do you go about paying it off? Read on to get some easy-to-follow steps for dealing with your credit card debt.<\/p>\n\n\n\n

What Are Credit Card Interest Rates?<\/h2>\n\n\n\n

Credit card interest rates are the amount the lender charges you for the use of its money. If you use a credit card to buy $500 worth of goods, you\u2019re using the credit card bank\u2019s money to do so. And if you don\u2019t pay it back immediately\u2014within the statement cycle\u2014the bank charges you a fee for using its money. That fee comes in the form of interest.<\/p>\n\n\n\n

Credit card interest rates are typically higher than interest rates for other forms of credit forms, like auto loans or mortgages. That\u2019s because credit card debt isn\u2019t secured. The lender can\u2019t come and take your property and sell it to recover losses if you don\u2019t pay your credit card statements. That makes credit card debt riskier, so lenders charge more interest to make up for that risk.<\/p>\n\n\n\n

How high your APR\u2014short for \u201cannual percentage rate,\u201d which is another term for the interest rate\u2014can also depend on your credit score. That\u2019s because the lower your score, the riskier you seem as a borrower. Again, the lender might charge a higher interest to make up for that risk.<\/p>\n\n\n\n

Credit card interest rates can range from 0% for introductory offers to as much as 30% or more for those with bad credit or who have missed payments on their accounts and been charged penalty interest. According to the Federal Reserve, the average credit card interest rate<\/a> for all accounts in 2019 was around 15.05%.<\/p>\n\n\n\n

Rates that fall at or below the average of 15% may be considered decent interest rates for credit card debt. Rates that are above the average are considered high.<\/p>\n\n\n\n

High-Interest Credit Cards<\/h3>\n\n\n\n

High-interest credit cards cost more to use if you don\u2019t pay off your balances every month<\/em>. But if you can pay those balances regularly<\/a> and your card comes with really great rewards, you might be able to make money off the card.<\/p>\n\n\n\n

The problems start as soon as you begin accruing interest. That high rate can add up fast, causing you to owe more than you realized. And if you\u2019re ever late on your payment, you might be charged late fees and penalty interest that compounds the problem. High-interest credit card debt can snowball into a balance you struggle to keep up with, and that can lead to damaged credit history and even being put into collections and sued for the amount you owe.<\/p>\n\n\n\n

How to Pay Off High-Interest Credit Cards<\/h2>\n\n\n\n

If you see that your high-interest credit card debt is beginning to build, taking proactive steps to pay off those balances<\/a> can be a good idea. Here are some steps to pay off high-interest credit cards and avoid the negative consequences stated above.<\/p>\n\n\n\n

Stop Using These Cards<\/h3>\n\n\n\n

The first step to battling credit card debt is to put the plastic away. If you\u2019re still spending with the card, you\u2019re going to struggle to pay the balance down. At best<\/em>, you\u2019ll experience a two-steps-forward, one-step-back approach to debt reduction, which is frustrating and can cause you to quit before you reach success. So if possible, stopping all use of your high-interest cards is the best way to go.<\/p>\n\n\n\n

Decide Which Method You Prefer<\/h3>\n\n\n\n

When dealing with multiple credit cards, decide whether you\u2019re going to use the snowball or avalanche method<\/a> of paying down debt.<\/p>\n\n\n\n