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The average interest rate on credit cards just hit its highest level in more than 15 years. Here are 4 things to consider doing now.

MarketWatch logo MarketWatch 9/19/2022 Andrew Shilling
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The average interest rate on credit cards just broke a decades old record this month as it hit 17.96% — the highest it’s been since 1996, according to data from Bankrate. What’s more, Federal Reserve Chairman Jerome Powell has made it clear that rates aren’t coming down soon, after recently suggesting future hikes would bring “some pain to households and businesses.” And Bankrate Senior Industry Analyst Ted Rossman notes: “The best guess, according to investors, is that rates will rise another 150 basis points by the end of the year.”

For those with credit cards, this means your rate could fluctuate as a result. “Rate hikes generally affect new and existing balances,” Rossman said, adding that “most credit cardholders are currently facing rates that are 225 basis points higher than they were just six months ago.”

So what should you do if you’re holding a credit card with a high interest rate? Of course, your best option is to pay your bill in full and on time, so you never pay interest, but we understand that isn’t always possible. Here are some ways, if you’re diligent, to pay less on your debt.

Consolidate your debt with a personal loan

If you can get a lower rate on a personal loan — see the lowest rates on personal loans you may get here — than with your credit card, it may make sense to consolidate your credit card debt with a personal loan. Just remember, if you don’t repay your personal loan, your credit score will take a hit.

Switch to a 0% balance transfer card — and repay the card before the 0% period ends

A number of credit cards have 0% balance transfer offers now — you can use this tool to find a credit card that might meet you needs — and if you’re savvy this can save you money. But remember, most of these offers are for a limited time (like 0% for 12 months), and with potential rate hikes on the way, you’ll want to make sure you pay it off relatively fast, otherwise you may high rates on the debt.

Consolidate your debt with a HELOC

These tend to have far lower rates than personal loans — see the lowest HELOC rates you may get here — but the risk is that you can lose your home if you don’t repay a HELOC.

Look for a lower interest credit card

Plenty of cards have starting rates that are lower than average. And even a few points shaved off your interest rate can have a big impact on your bottom line.

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