2021 Earned Income Tax Credit

AVERAGE CREDIT CARD INTEREST RATE

The average credit card interest rate skyrocketed to 20.50 percent. The credit card interest rate is heading in a complete trajectory than the other financial products. According to Bankrate’s latest survey, the benchmark 30-year fixed mortgage rate is 3.060%. Super prime customers can access rates below 3%

The Federal Reserve cut its benchmark rate to zero back in March to facilitate cheap borrowing, but credit card borrowers do not benefit from historic low-interest rates.

Why Are Credit Card Debts So Expensive?

Credit card annual percentage rate (APR) continues to surge while other debts are getting cheaper because of risk, COVID-19, and the global economy.

The global pandemic severely impacted big credit card issuers. They are facing colossal credit losses.

Millions of their customers lost jobs and had to request forbearances on credit card payments. Macroeconomic data indicate that the global economy is in a recession. The International Monetary Fund (IMF) said that a recovery might not start until 2022 or early 2023.

Alternatives to Expensive Credit Cards

Would-be credit card borrowers need to dig into their emergency Funds first. Banks are paying close to 0% interest on savings accounts. Savers love the peace of mind that comes with having a few thousand dollars in the bank, but borrowing on credit cards is a high price to pay for that peace of mind.

Personal loans are another alternative to expensive credit card debts. Aggregated sites such as LendingTree and Sofi let customers shop for personal loans online. It’s an installment loan, and the APR can be as low as 5%

How to Use Credit Cards Wisely

Lenders want you to be creditworthy before they can finance that house, car, or new business, and the FICO credit score is how 90% of them determine that creditworthiness. Credit cards, secured or unsecured, are among the best ways to build a good credit score.

FICO credit score is a three-digit number based on information in your credit reports. Your mortgage, credit card, and auto loan payments, and other lending products tradelines in your credit reports.

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