5 Ways to Pay Off Your Credit Cards Fast as Interest Rates Rise

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Inflation has been skyrocketing lately and the Federal Reserve wants to do something about it. Since the beginning of this year, the Fed has implemented interest rate hikes, and it is by no means over.

Why are interest rate hikes the solution to runaway inflation? The hope is that if borrowing becomes too expensive, consumers will start spending less. Once that happens, it should help lower the cost of goods because there won’t be as much demand versus supply (think Economics 101).

But while slowing inflation is a good thing, higher borrowing costs could spell trouble for people who owe money on their homes. credit card. This is because credit card interest rates tend to be variable, so when rates generally rise, existing balances can become much more expensive to pay off.

If you’re sitting on a credit card balance, it’s important to act quickly to reduce it. Here are some strategies you can use to get there.

1. Reduce expenses

It will take money to eliminate your credit card debt, so if you want to get rid of your balance before interest rates rise even more, you will need to seriously cut back on your spending. That could mean placing a three-month moratorium on things like dining out, weekend travel, and subscription boxes until you’ve made decent progress.

2. Get a side job

Increasing your income is a great way to find money to pay off your credit cards. The gig economy is booming right now, which means there are plenty of opportunities to get out there and get a side hustle whose income can go straight to your debt. Remember that with a side gig, you’re not necessarily committing to a long-term deal, so you can work one until your debt runs out and then claw those hours back into your schedule.

3. Perform a balance transfer

Many balance transfer the cards come with a limited period of 0% interest. If you transfer your existing debt to a card with this offer, you can avoid accruing interest while you work to reduce your balance.

4. Tap your home equity

If you own a home, you may be able to take out a loan against the equity you own. You can use this loan to pay off your credit cards and then pay off this loan instead. Why is it beneficial? Home Equity Loans let you lock in a fixed interest rate on your debt, so you don’t have to worry about having to pay more when interest rates rise.

5. Take out a personal loan

A Personal loan lets you borrow money for any purpose. Unlike home equity loans, personal loans are not secured by any specific asset. But they work the same way in that they come with fixed interest rates, which means they’re a less risky way to borrow than continuing to carry a credit card balance.

Paying off credit cards as quickly as possible is always a smart thing to do. But it makes particular sense these days, as interest rate hikes are set to continue. Use these tips to get rid of your balance before it starts costing you more.

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