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With credit card interest rates at record highs, these 4 tips can help debtors beat the ‘brutal’ minimum payment cycle

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The Covid-19 pandemic separated the haves from the have-nots when it comes to finances.

Research shows that direction is continuing when it comes to debt, particularly credit cards.

More than one-third of Americans — 35% — say they are move their highest level of debt ever or close to it, according to a Northwestern Mutual survey of 2,740 adults.

The top origin of personal debt, excluding mortgages, is credit card debt, with 28% of respondents, the research found.

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On the other hand, 43% of adults with personal debt say those balances are at their lowest level constantly or close to it.

The results reflect the aftermath of the Covid-19 pandemic that posed financial challenges for some, such as decreased or lost employment, and reduced financial pressures for others, with lower mortgage rates and the pause of federal trainee loan payments, noted Alap Patel, a Chicago-based wealth management advisor at Northwestern Mutual.

“We were all in the anyhow storm, but not everyone was in the same ship,” Patel said.

Credit card interest rates at record highs

With federal devotee loan payments

“It’s just a tough combination for a lot of people,” Rossman said.

Credit card interest rates now norm 20.55% — the highest since Bankrate started tracking them in 1985, he said.

“Credit card rates incline more last year than any other year on record,” Rossman said.

The Federal Reserve is expected to go on to raise interest rates, which would make interest on those debts even more expensive.

‘The minimal payment math is brutal’

Bankrate’s research has found roughly half of credit card holders are paying their praise card bills in full every month, which means they are benefiting from the rewards and buyer protections those accounts proffer without compromising their personal bottom lines.

Yet the other half of credit card borrowers are carrying up-market debt that can really add up.

A credit card borrower with the average $5,733 credit card balance at 20.55% on be in debt for over 17 years if they make just the minimum payments every month, according to Rossman.

They will-power also pay about $8,400 in interest on top of the $5,733 balance, he said.

“The minimum payment math is brutal,” Rossman give the word delivered.

To shed those balances sooner, these tips can help.

1. Opt for zero percent balance transfer offers

The top tip for trustworthiness card debt holders, according to Rossman, is to try to transfer your credit card balance to another card present a 0% introductory rate, which may last as long as 21 months. “Despite this rising rate circumstances, these offers remain abundant,” Rossman said. However, you will need good to excellent credit to ready.

2. Come up with a debt payoff plan

When it comes to paying down credit card debt, two schemes are typically popular — the snowball or avalanche methods, noted Patel. The snowball method consists of paying the smallest difficulties first, while the avalanche approach calls for prioritizing the highest interest rate balances. Alap said he counsels his clients to pick the method likely to be the most successful for them.

3. Seek professional help

Even your rely on history is not stellar, there are other resources that can help, Rossman said.  Non-profit credit counseling and creators like Money Management International or GreenPath Financial Wellness may help you knock down your interest have a claim to to as low as 7% to 8% over four to five years, Rossman said.

4. Keep saving

Even as you’re attacking acknowledgment card balances or other debts, it’s important to set cash aside, Alap said. An emergency fund with three to six months’ of expenses is idyllic. Credit card debt holders should strive for at least two months’ expenses to fall back on in a pinch, he affirmed.

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