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Credit Card Information and Advice
Credit cards are quickly becoming the norm as more and more people are making the switch from paper to plastic. The growing census is that credit cards are easier: easier to carry, easier to pay, and easier to keep track of.
However, with all the simplicity credit cards have to offer, there is a much darker flip side: credit card interest.
Knowing Your Interest Rates
While credit cards can help boost your credit, they can also hurt it. One important way to stay on top of your credit is to be aware of which cards carry the highest interest and which ones carry the lowest interest. There are two types of interest rates:
- Fixed Rate: Where your card’s rate remains the same on a month-to-month basis
- Variable Rate: Where your card’s rate changes based on an index, usually the prime rate.
While variable rates are typically lower than fixed rates, they’re often subject to change. Cards with variable rates are far more common, as more and more banks are now tying their rates directly to the prime rate in an effort to minimize risk.
Bank-Issued Credit Cards
Most banks and credit unions offer their own credit cards to customers. While interest rates on these cards vary, they typically come with a few perks. For instance, Bank of America’s Cash Rewards™ program gives you 1% cash back on every purchase.
While it’s important to consider the perks of a credit card, this shouldn’t be your sole qualifier. A lot of credit cards offer a variety of promotional rates for signing up, which often include a much lower interest rate for the first few months. It’s also important to check when the promotional rates expire, and what the terms are afterwards.
Before you apply for a credit card, be sure to shop around for the best offer. While bank-issued credit cards may be more convenient, there may sometimes be a better deal elsewhere. Do your research and check reviews online for the best deals and rates.
More Credit Cards. More Credit Card Debt
Because studies show people keep their first credit card for up to 15 years, it’s no stretch to say they’re spending most of that time trying to pay it off.
The average American household has around 14 credit cards, and most people tend to use different credit cards for different things. You may have one credit card for your car payment, one for household payments, and another for your everyday purchases. Regardless, it’s important that you keep track of how much you’re spending, as a growing number of people are facing more and more debt because they have more money going out than coming in.
If you or someone you know is struggling to keep up with multiple credit cards, learn more about how we can help over at our Credit Counseling page. Or just pick up the phone and have a chat with one of our credit counselors at 1-800-500-6489 to learn more about what we can do to help.
Paying Off Debt
The easiest way to pay off your debt is to take a no-holds-barred approach. Look at which cards have the highest interest rate and start paying those off first. After you’ve targeted the higher-interest cards, you can work your way down the funnel.
For more information on credit cards and how their rates apply, visit our credit card debt page.
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