LAS VEGAS (KTNV) — When was the last time you checked the interest rate payment on your credit card? If it's been a few months, chances are you might be paying a lot more than you think.
According to a new study from WalletHub, the average credit card interest rate is nearing 21%.
Tonna Wilson had no idea how much she was paying in interest until she checked her statement Thursday afternoon.
”Oh my goodness. It’s 29%, that’s a lot! I’m never going to pay that off,” Wilson said.
While being in debt is never ideal, now is a particularly tough time for consumers.
"The average credit card user doesn't understand how devastatingly high those interest rates are,” said Steve Budin, Channel 13’s financial analyst.
Budin says APR’s have seen steep increases partly because of the Federal Reserve's recent rate hikes.
“If you read the fine print, the credit card company does reserve the right to raise that rate with what the federal reserve does,” Budin said.
Each time it rises, Budin says it makes it much harder for consumers to pay off outstanding balances, even if they're not charging more on their credit cards.
"It's a very vicious cycle that's tough to get out of,” Budin said.
At a time when many are feeling a financial squeeze because of inflation, Budin says turning to plastic may be inevitable.
"The difficulty many of our viewers are facing right now is two-fold. If the wages people earn don't keep pace with inflation, they fall behind and tend to use credit cards to make up that difference,” Budin said.
Budin also shared tips on how to pay off debt as quickly as possible.
“First thing to do is stop using the credit card. There’s no sense in running up the balance even worse than it is now. If you have more than one card, pay off the higher interest rate card as quickly as you can. Do that one first because it does save you money in the long run by saving those interest payments,” Budin said.
