How to Tackle High Credit Card Interest Rates in 2023

I have to be honest with you. When I first saw the data on the current average interest rate imposed on consumers who don’t pay their credit card bill in full, I thought something was wrong with my eyes. The current average rate is more than 22%.

Are you kidding me? Twenty. Two. Percent. That is insane.

Insane, but true. A year ago, the average was “just” 16.7%. That was bad enough, but now the cost is nearly 5 percentage points higher.

If you are paying 22% or more the simple math is that you could likely end up paying far more in interest than your original unpaid balance if you only make the minimum monthly payment each month.

For instance, someone with a $3,000 balance paying 22% interest and making the minimum payment each month will pay more than $4,200 in interest before the balance is paid back in 17 years. Yep, 17 years. (This example assumes the minimum payment is equal to 3% of the balance.)

Are we agreed that is a horrible deal?

Look, I totally understand that money may be tight. Or that you never intended to run up a big unpaid credit card balance. No blame, no shame. But I will not sit here and just let you resign yourself to paying 22%+ interest.

I sure hope you will seriously consider some options you have to get out of credit card debt sooner rather than later.

See if you qualify for a zero-rate balance transfer deal.

If you have a solid credit score you still may be able to qualify for a credit card deal that allows you to transfer your balance over to the new card and not owe any interest on the transferred amount for 15 months or longer. Those are valuable months where you can commit to getting the balance paid off—or much lower—without having the costly drag of interest costs. A web search of “best balance transfer deals” will point you in the right direction.

To be clear, there is typically a fee for a balance transfer. It can be 3% to 5% of the amount you transfer. That’s a lot. But if you manage to get the balance paid off during the months when there is no interest being charged, it’s going to be a better deal than slowly paying down a card charging you 22%.

Get a side gig.

Take on a part-time job, or some gig work with the single goal of making enough to pay off your credit card bill. Don’t tell me you can’t. I know this may be a sacrifice, but think it through: Would three months or six months of a gig give you the money you need to be out of credit card debt? Or even a year or more. That’s better than 15+ years of paying 22% interest.

Sell the second car.

Maybe this isn’t practical in your household. But maybe it is. Stand in your truth: Could your family learn to get by with one less car? Even if you need to rent a second car for a weekend once in a while, you are still going to save a ton of money.

Six months of no wants.

No dining out. No concerts. No new clothes. You get the idea. Yes, I know I am (again) asking you to make this sacrifice. But there is an even bigger gain – financial security. And it’s not a life sentence of no wants. It’s just for a period of time so you can free up cash to get out of credit card debt.

Getting out of credit card debt is only going to be a major win if you can stay out of credit card debt. You have to stand tall in your own truth. If you are using credit cards to cover basic living expenses that’s a lot different than having debt because you spend way too much on wants.

It will come as no surprise that I don’t ever think there’s a good time to carry credit card debt. But right now, with the average interest rate above 22%, it is an especially bad time.