How to lower your credit card rates before the Fed starts hiking

Personal Finance


To avoid paying more than you should, make a move now before rates go substantially higher.

There are a number of ways to both consolidate your debt and lock in a lower rate, at least for a while. The type of options available to you depend on your creditworthiness and the amount of debt you’re carrying. Here are a few options:

Zero percent balance transfer cards: The good news is that interest rates remain historically low, so card companies are offering cards that boast long-term zero percent balance transfers. If you have balances on a number of variable-rate credit cards, consider consolidating them all to a zero percent balance transfer card.

“There are still plenty of zero percent offers for balance transfers, as well as purchases, that last as long as 15 months,” says Bankrate.com’s McBride. “What that does is give you 15 months where you are both insulated from rising interest rates and have a very strong tail wind to eliminate your debt.”

Keep in mind that many balance transfer cards charge a transfer fee of about 3 percent. If your credit score is solid, however, you may qualify for cards that come with little or no transfer fees. Compare offers for balance transfer cards at comparison sites such as BankRate.com, CardRates.com, and WalletHub.

Take a look at the cards you already have: If your credit score eliminates you from the best card offers, the solution to consolidating and benefiting from a lower card rate may already be right there in your wallet. Brooklyn Lowery, senior manager at credit card comparison site CardRatings.com, says cardholders may already have accounts open that offer lower rates or introductory balance transfer offers.

“You may not even have to open a new card account,” she said. “Even if you have one card with a 16.99 percent APR, but the other card has a 14.99 percent APR, it might be worthwhile to transfer the balance.”

When comparing cards, pay attention to any transfer fees and other account fees to make sure the card you choose is offering the best deal, she said.

Home equity loan: Using your home as collateral to pay down a pile of credit card debt is far from ideal. The drawbacks are many: the application process is time-consuming, rates right now tend to be in the 5 percent or higher range and interest payments generally aren’t tax deductible. But for individuals struggling to make ends meet — even before rates head substantially higher — a home equity loan can be a way to consolidate your debt and motivate you to make set monthly payments to pay off your debt.



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