Credit Card Interest Rates Just Hit a Record High. Here's How to Pay Off Your Balance ASAP

The sooner you pay off your debt, the less it'll cost you.

Inflation has been battering consumers since 2021. Over the past 18 months or so, Americans have increasingly been raiding their savings and racking up debt just to cover basic needs like housing, transportation, and food.

The Federal Reserve, meanwhile, is trying to cool inflation. And its tactic has been to raise its benchmark interest rate. Doing so indirectly makes it more expensive for consumers to borrow, whether in the form of a credit card balance or personal loan. And the Fed's goal is to push consumers to spend less, thereby narrowing the gap between supply and demand that's been causing inflation to soar.

So far, the Fed's efforts haven't done a whole lot to bring inflation levels downward (though we're right on the cusp of the latest inflation reading, so it'll be interesting to see if that changes). But those interest rate hikes have served the purpose of making borrowing more expensive.

Case in point: The average credit card annual percentage rate just rose to 19.04% as of Nov. 9. That's the highest rate since 1985, beating out a prior record set in July of 1991.

If you owe money on your credit cards, it's imperative that you do what you can to pay down your balance as quickly as possible. The sooner you do, the less you stand to spend on interest. And you'll especially want to get ahead of that debt before interest rates rise even more. Here's how.

1. Look at a balance transfer

If you have good credit, you might qualify for a balance transfer that allows you to move your existing credit card balances onto a new card with a lower interest rate. You may even qualify for a 0% introductory APR for a limited period of time. Getting a reprieve from a higher interest rate could make it easier to make headway on paying your debt off. Just pay attention to balance transfer fees and other expenses you might incur if you go this route.

2. Consolidate via a personal loan

Personal loan rates today are higher than they've been in the past as part of a broader trend. But you might still pay a lot less interest on a personal loan than on a credit card. So if you're able to qualify for one of these loans, you can use your proceeds to pay off your credit card debt and then chip away at that loan balance as you can.

3. Make sure to give your income a boost

Whether you make your credit card debt more affordable via a balance transfer or personal loan (or you simply tackle those balances as they stand today), it'll take extra money to pay it off quickly. And so to that end, you might consider getting yourself a second job and holding onto it until your debt is eliminated.

Granted, you could also cut back on spending to free up cash for debt payoff purposes. But given the way inflation is soaring, there may not be a lot of cutting back you can do. So rather than resign yourself to spending loads of money on credit card interest, instead, explore your options for picking up gig work, whether it's driving for a ride-hailing service or working weekend shifts at a local store.

Credit card interest rates could continue to rise as the Fed fights back against inflation. The best way to protect yourself from that is to pay off your existing debt as soon as you possibly can.