The Federal Reserve raised its key rate by another quarter point Wednesday, bringing it to the highest level in 15 years. Here’s what the increase means for your credit card bill and what you can do if you’re carrying debt:
If your APR increases by a percentage point, paying off your balance would take two months longer and cost an additional $215.Courtney Alev, consumer financial advocate at Credit Karma, said that knowing the Annual Percentage Rate, or APR, on your card is an important first step for anyone looking to get out of credit card debt.To figure out your APR, you can log in to your online banking account, look at your financial statement, or call the number on the back of your credit card, Alev says.
Other debt payoff strategies include taking a low-rate personal loan as a form of consolidation and pursuing a debt management plan offered by a reputable nonprofit credit counseling agency such asIf your income just covers your necessities, reducing credit card debt can be challenging. Elena Pelayo, educator at
, a financial literacy organization, recommends that even if you live paycheck to paycheck, you might want to add at least $10 above the minimum payment of your credit card with the highest interest rate.And if you can afford it, she recommends paying 10% more than the minimum payment per month.” where you pay down your debts from smallest to largest, to build momentum and good habits.
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