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With interest rates rising rapidly and prices soaring due to inflation, racking up credit card debt is one of the biggest regrets Americans have. According to a new survey, one in five people would rather have someone read their text messages than show them their credit history.
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The Upgraded Points survey found that 35% of respondents said they immediately regretted a credit card purchase. Additionally, 24% say they would rather go to the dentist than share their credit history with their partner.
Impulse purchases, which offer instant gratification, are also greatly regretted, with 36% of respondents saying they bought something with their credit card that they couldn’t afford but didn’t want to wait.
According to Creditcards.com, the average credit card interest rate as of July 20 is 17.46%, and with the Federal Reserve set to hike rates again on July 27, this is likely to increase further, “causing average credit card interest rates to quickly soar to all-time record highs.” “
“Now that the Fed is raising rates at its fastest rate in decades, credit card issuers are quickly adjusting by raising rates themselves. As a result, consumers are seeing card offerings changing at a dizzying pace, with several credit cards now offering higher rates than they have been in years,” according to Creditcards.com.
In turn, “such an aggressive approach could help curb further price growth, but is unlikely to help borrowers who are already indebted. With more rate hikes on the horizon, borrowers who are already grappling with rates that are far higher than they were just a few months ago will have little time to pay off their current balances before their APRs start to rise again,” added Creditcards.com.
As interest rates rise, so does debt. Credit card balances are $71 billion higher than in the first quarter of 2021, according to the Federal Reserve Bank of New York, representing a significant year-over-year increase.
According to Senior Content Contributor and Founder and CEO of AuPACS of the Upgraded Points website, Stephen Au said that setting up autopay on your credit cards and forgetting about it is the best way to go. “It’s automated and helps you maintain a perfect payment history for your credit score.”
Ted Rossman, senior industry analyst at CreditCards.com, told GOBankingRates that many people are afraid to look at their credit card statements because they can be overwhelming.
“TransUnion says the average American has $5,010 in credit card balances. Credit cardholders have 40% of their accounts in balance each month, according to the American Bankers Association. The average credit card rate is 17.25%, which is nearing a record high,” Rossman said.
He added that credit card debt is easy to get into and hard to get out of, as half of people have had credit card debt for at least a year and about a third for at least two years.
“If you’re making minimum payments on the average balance at the average interest rate, you’ve been in debt for more than 15 years and owe about $6,000 in interest. It’s an uncomfortable reality, but there are some things you can do to help,” he said.
Rossman says his top tip is to sign up for a 0% balance transfer card, which can stop the interest clock for up to 21 months.
“Other good strategies might include using a low-interest personal loan as a form of debt consolidation, or working with a reputable nonprofit credit agency like Money Management International,” he said.
Additionally, personal loan rates go down as low as about 6% over five years if you have good credit, and debt management plans offered by reputable credit officers often have similar terms and are more widely available, he said.
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“Even the basics are important. Boost your debt payoff strategy by looking for ways to increase your income and/or decrease your expenses. Ideas might include taking on a side job, selling things you don’t need or canceling under-used subscription services, and eating out less often,” he added.
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