ROCKY HILL, CT (WFSB) – Throughout the month, we’re helping you navigate a bloated economy and save money. If you’re trying to pay off credit card debt, it can be difficult, especially with the higher interest rates.
We wanted to know how much this bloated economy weighs on people’s budgets. Consumer Ellen Felgate spoke about the impact of higher interest rates.
“We try to limit ourselves to one credit card. Thank God I did. But it was very high. It makes a big difference when you add it to gas and food,” Felgate said.
Interest rates make credit card debt harder to pay off. We spoke with two experts to find out what you should do right now to save money.
“There are strategies. Debt consolidation can often be helpful. Debt snowballs to pay off debt,” Felgate said.
Stephen Patterson, an expert and financial planner for KeyCity Capital in Dallas, said trying the debt snowball method first. Pay as much as you can on the smallest credit card debt. Once the credit card is paid off, take the money invested in that payment and roll it like a snowball onto the next smaller debt owed. Ultimately, this snowball payment only gets bigger.
“I always advise going after the smaller balance first because that gives you a win,” Patterson said. “Trying to keep spending on one card can often help.”
As a second strategy, call your credit card company and ask what can be done. Osman Kilic, a finance professor at Quinnipiac University, said he was asking for a lower interest rate.
“They don’t want to lose you. They will work with you. You are their customer. Please call them,” Kilic said.
A third tip, consider balance transfers. Use one card to pay off the other with a lower percentage rate, but only if you can pay it off in full within the time limit.
“The challenge is that at the end of this period, this rate will increase significantly, so you have to make the most of it,” Patterson said.
Experts said a fourth piece of advice was to consider debt consolidation companies. However, you need to do your homework. Be sure to research the company and ask tough questions. For example, if it will hurt your credit score. More importantly, make sure they are legit.
“Some of them are very helpful. They work on your behalf with credit card companies,” Kilic said.
Patter said, “Make sure the interest rate on the debt consolidation loan is significantly lower than the interest rates you pay on credit cards.”
Both experts said you can use one or maybe all of these tips that could help combat those higher interest rates to lift even a little of that heavy weight.
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