5 Ways to Pay Off Your Credit Cards Fast as Interest Rates Rise

Owe money on credit cards? It pays to eliminate that debt soon.

Inflation has been soaring lately, and the Federal Reserve wants to do something about it. Since earlier this year, the Fed has been implementing interest rate hikes, and it's not finished by any means.

Why are interest rate hikes the solution to rampant inflation? The hope is that if borrowing becomes too expensive, consumers will start to spend less. Once that happens, it should help drive the cost of goods downward since there won't be so much demand relative to supply (think Economics 101).

But while cooling inflation is a good thing, higher borrowing costs could spell trouble for people who owe money on their credit cards. That's because credit card interest rates tend to be variable, so when rates rise across the board, existing balances can become much more expensive to pay off.

If you're sitting on a credit card balance, it's important to move quickly to get it whittled down. Here are some strategies you can employ to make that happen.

1. Slash expenses

It'll take money to eliminate your credit card debt, so if you want to get rid of your balance before interest rates rise even more, you'll need to get serious about cutting expenses. That could mean putting a three-month moratorium on things like restaurant meals, weekend trips, and subscription boxes until you've made decent progress.

2. Get a side job

Boosting your income is a great way to come up with the cash to pay off your credit cards. The gig economy happens to be booming right now, which means there's plenty of opportunity to go out and get a side hustle whose earnings can go directly toward your debt. Remember, with a side gig, you're not necessarily committing to a long-term arrangement, so you can work one until your debt is gone and then reclaim those hours in your schedule.

3. Do a balance transfer

Many balance transfer cards come with a limited period of 0% interest. If you move your existing debt onto a card with that offer, you can avoid accruing interest as you work to whittle your balance down.

4. Tap your home equity

If you own a home, you may be able to take out a loan against the equity you have in it. You can use that loan to pay off your credit cards, and then repay that loan instead. Why is that beneficial? Home equity loans let you lock in a fixed interest rate on your debt, so you don't have to worry about having to pay more as interest rates rise.

5. Take out a personal loan

A personal loan lets you borrow money for any purpose. Unlike home equity loans, personal loans aren't secured by a specific asset. But they work similarly in that they come with fixed interest rates, which means they're a less risky way to borrow than continuing to carry a credit card balance.

Paying off credit cards as quickly as possible is always a smart thing to do. But it especially makes sense these days, since interest rate hikes are likely to continue. Use these tips to get rid of your balance before it starts to cost you more.