Credit card debt is getting more and more expensive. Here’s how to pay if you’re down.

Carrying on credit card debt is becoming increasingly financially wasteful for consumers as the Federal Reserve hikes interest rates to tame the boom inflation.

the fed recently hiked interest rates by 75 basis points, making borrowing more expensive. Credit card issuers are now expected to increase their annual percentage rates (APRs) — the amount that interest cardholders pay each month on their unpaid balances.

The average interest rate for credit cards is currently just under 17% and is only expected to increase. If most card companies match the Fed’s recent three-quarters rate hike, the national average credit card interest rate could soar to well over 17%, according to a report by These prices could continue to rise if the Fed continues to raise interest ratesas most analysts expect.

“Credit card debt is only going to get more expensive in the coming months,” said Matt Schulz, credit card analyst at LendingTree, an online lending marketplace. “When the Fed hikes rates, virtually all credit card rates go up, so it’s really important that you get rid of your credit card debt now.”

Americans have a lot of credit card debt. While card balances declined by $841 billion in the first quarter of 2022, in line with seasonal trends, they are still $71 billion higher than the same period last year, according to the New York Federal Reserve. According to LendingTree, cardholders have an average of $6,569 in credit card debt.

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Avoid purchases that you cannot afford

For starters, stop raising your capital by putting purchases you can’t afford on a credit card.

“Sometimes it’s tempting to use a credit card to fill a gap in your spending and income, but it can add up when you have to pay it back and interest rates are high compared to other types of debt,” Corey Stone, Senior Advisor at the Financial Health Network and a former officer of the Consumer Financial Protection Bureau.

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Since interest rates on credit cards are higher than interest rates on mortgages, student loans, and car loans, it’s important to deal with outstanding credit card debt first.

“Maybe even avoid putting money into a savings plan, especially now that yields aren’t high but interest rates are,” Stone said.

Snowball vs Avalanche

Two popular approaches to paying off overdue credit card balances are the so-called snowball and avalanche methods. Taking the snowball approach means organizing all of your debt by amount—not by the interest rate you pay on it.

The idea is to make minimum payments on all of your debts to avoid being hit with late fees, but start by paying off the smallest, most manageable debts in full.

“You invest money in this one because you get a small profit right away,” said Nick Meyer, a certified financial planner who shares his personal finance knowledge on TikTok. “Then you move on to the next one until all your debts are settled.”

If you use the avalanche method, which Meyer says is more financially prudent, sort your debt by interest rate, ranking it from highest to lowest — then pay off the debt that’s most expensive to bear.

Of course, this method can be more psychologically challenging, since large debt balances with higher interest rates can take months to pay off, according to Meyer.

Ask your card issuer for a lower rate

It’s always a good idea to simply ask your lender to lower your interest rate. Most people assume that there is no room for maneuver in prices and fees, but that’s often not the case.

Also, contact your lender with a repayment plan that you know you can meet.

“Many lenders are open to creating a payment plan for you that customers don’t know about. Be proactive and ask about a specific payment plan,” said Kristy Kim, co-founder and CEO of TomoCredit, a new credit card company for people without credit, like young adults and immigrants.

“If your lender doesn’t agree with a payment schedule or your APR is too high, you can find products that allow you to consolidate your debt in one place at a lower APR,” Kim added.

Lending Tree’s Schulz said that while few people ask their lenders to lower their interest rates, the majority of cardholders who seek rate cuts are successful.

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Transfer your balance to a 0% APR card

Consumers can consolidate their credit card debt and move it to a new card that offers customers a promotional rate of 0% APR.

“This may be a temporary fix, but longer-term customers need to think about how they can use a product that’s inherently safer for them so they’re mentally trained to manage their personal finances with less risk,” Kim said .

For example, the Wells Fargo Reflect credit card offers new customers an introductory 0% APR for up to 21 months. This allows people to continue paying their debts while preventing them from growing.

“That can translate into huge savings of hundreds or even thousands of dollars depending on how much you owe,” said Ted Rossman, senior credit card analyst at

Divide the total amount you owe by the number of months in the interest-free period and stick to paying a set amount each month. Note that you might be charged a 3% to 5% transfer fee upfront, but Rossman said it’s “still worth it.”

“If you get it right and don’t put any new purchases on the card, it’s a great way to save money. The new loan essentially pays off the old loan at a much lower interest rate,” he added.

Take out a low-interest personal loan

Low-interest personal loans are another way to consolidate debt and pay off it more cheaply. Interest rates will not be zero, but could be as high as 6%, compared to the roughly 17% APR that most credit cards carry.

A personal loan allows you to combine different types of debt, including credit cards, medical bills, and car payments, into a single product and repay them at a lower monthly rate. Borrowing terms are generally favorable and can come with low interest rates that are locked in for up to five years, Rossman said.

Of course, if you limit yourself to expenses and find additional sources of income, you can bring in more money than you spend and pay off your debt faster.

Finding a side job, selling unwanted items, and cutting expenses can also help people gradually reduce their debt to manageable levels.

“The basics of earning more and spending less can be applied along with some of these other strategies,” Rossman said.

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