Inflation is affecting us all in many different ways. As prices continually increase, we are struggling to afford basic necessities like groceries and gas. For those struggling with debt, rising credit card interest rates have the potential to do considerable financial damage. With large amounts of credit card debt, it’s important to understand the full scope of consequences from the rising interest rates and learn how you can avoid financial stress.
Difficult Debt Repayment
Making bare minimum payments isn’t going to be enough as inflation takes its toll on inflation rates. Without strategic payment plans, it will be easy to get overwhelmed with debt because higher interest rates mean longer payoff times and increase in overall debt. In an article about how expensive credit card debt is becoming, CNET gives an excellent example of what could happen: “Let’s say you carry a credit card balance of $5,525, which is the national average according to the credit bureau Experian. Meanwhile, the average new credit card interest rate is roughly 20%. If you make only a minimum payment (let’s assume the minimum payment is the standard 2%), paying off your card’s balance would take you just over 58 years and cost you more than $24,750 in interest.”
That’s over half of your lifespan spent making payments – more than quadrupling your credit card debt. Of course, inflation will hopefully reduce over time but the experts say that it may not happen anytime soon.
Preparing for More Inflation
Unfortunately, it doesn’t appear that inflation rates will be decreasing for a while. According to Bankrate, “the Fed’s rate-setting committee noted it expected ongoing increases in the target rate will be appropriate. Bank economists surveyed by the American Bankers Association expect the central bank to further hike its target rate by a total of 100 basis points at meetings coming up after June. That would take the fed funds rate to the 2.25 percent to 2.5 percent range by year end.” While the projections look bleak, there are ways to prepare our finances for what’s to come. Here are some things you can adjust in your budget to prepare you for the increased interest rates:
- If possible, move away from credit card payments or switch to a 0% APR credit card. While those tend to be more difficult to come by, no credit or credit without interest is the best way to avoid the negative impact of high interest rates.
- Build a sustainable budget that allows you to build your savings and stop relying on credit cards.
- Pay off your credit card debt if you can, or pay it down as quickly as you can before the interest rates rise beyond what your budget can handle.
The best way to accomplish paying off your credit card debt is with a debt consolidation loan from Lendah.
Combat Rising Credit Card Interest Rates with Lendah
With a debt consolidation loan from Lendah, you can pay off your credit card debt quickly before you feel the full effects of the rising credit card interest rates. By consolidating your credit card debt, you lower the amount of payments you make per month, improve your credit health, and form better financial habits as you work with the loan experts at Lendah. If you’re struggling to shift your financial goals with the changing economy, check out this blog about three new financial goals you can focus on despite the uncertainty.
If you’re stressed about the rising inflation, it’s important to remember that you aren’t alone and you don’t have to face your financial struggles without help. Lendah will work with you to find a personal debt consolidation loan program that’s just right for your financial needs.
If you’re interested in consolidating your credit card debt, get started today on our website. Prefer to talk in person? Call us at 833-453-6324 and we’ll get you connected immediately with one of our loan experts.