In America, the credit card is king. Credit card companies compete for customers with different deals, and often offer benefits and discounts to customers in exchange for using those cards. These benefits and discounts help customers. There’s only one catch: Credit cards accumulate interest when you don’t pay off your statement, and then they charge interest on the interest they put on your card–that’s called compound interest.
Many of us have more than one credit card. Many of us don’t pay off our credit cards in full each month. That’s a lot in debt.
If you make a partial payment on your credit card instead of paying in full, that debt accumulates. If you pay nothing at all, you are charged a late fee–and credit card late fees can lead to your APR (basically, the percentage of your card limit you pay in interest) being increased substantially.
Making things harder, the interest rate you pay on your credit card is generally higher than the interest you pay on most other forms of debt if you are a middle-class American. This interest accumulates rapidly and leads credit card holders to have extra debt.
It’s not all bad news, though. Alongside the credit card deals and discounts offered by credit card issuers, many credit unions offer low interest credit cards (generally ranging from 7% to 10% APR) to their members.
If you belong to a credit union, or are in their field of membership, try contacting your local credit union to see if they will offer you a credit card at a lower APR than the one you are currently paying.
(Image via Vecteezy)