UW Credit Union offers ways to reduce credit card interest rates
The Federal Reserve Bank of New York says total household debt nationwide stands at more than $16 trillion.
LA CROSSE (WKBT) — Senior Financial Specialist Brandon Labeots has worked at the University of Wisconsin’s Credit Union for more than 8 years.
He recommends that consumers dealing with high credit card interest rates amid high debt, talk to their bank or credit union to find out their options.
“For most folks, we don’t know what is available to us unless we ask,” he said.
On July 27, the Federal Reserve increased its benchmark interest rate by .75 percent. The Federal Reserve’s move to increase rates a number of times over the past couple of months has increased prime rates, which impact the rates of credit cards and other financials.
Prime rates are one of the metrics used by banks to determine the interest rates on loans, according to Labeots.
To mitigate high credit card interest rates, Labeots said one option is to take equity out of a home or vehicle.
“When you take a dollar amount and you move into something secure, generally speaking, the interest rate is going to be quite a bit less and you can refinance those dollars,” he said.
Labeots also said that consumers can do a balance transfer to reduce credit card interest rates. This involves taking out another credit card with a lower interest rate to offset the card with a higher one. Then, the consolidated payments are made on the card with the lower rate.
“So you may be able to do 0% for say 18 months, pay a 3% fee as opposed to paying maybe a 20% credit card interest rate,” he said. “It’s going to be dramatically less expensive,” he added.
The issues that Americans face involving credit card debt comes as the national debt has surged to more than $30.6 trillion.
Mike Klug has worked in financial services for more than 42 years.
He said the rising interest rates for credit cards, brought on by the Federal Reserve’s moves to curb inflation, is a symptom of an even sicker economy despite the jobless rate being 3.5%.
“Our national debt we cannot ever pay back,” he said. “We can never, ever pay back 30 trillion dollars in debt,” he added.
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