SAN ANTONIO (KABB/WOAI) – The Federal Reserve’s attempt to rein in soaring inflation in the form of another three-quarter-point rate hike will have many of us paying higher credit card bills.
“If you’re in that situation where you already have credit card debt, I would say look for a 0% APR card and roll it over to that,” says Joseph Warren, the co-owner of Financial Planning HQ.
Reassessing your credit card debt is a start.
Say your card or cards are maxed out – these experts are discouraging one practice in particular if you can avoid it: payday loans.
“Most people end up paying several times as much in fees, they don’t call it interest, they call it fees, as they originally borrowed,” says Ray Perryman, founder of accounting firm, The Perryman Group. “They can get into a long-term refinancing cycle where you really never get out of it.”
Perryman says even paying on a credit card charging you 18% to 24% interest is cheaper than a payday loan.
Credit Karma says Texas ranks as one of the worst when it comes to payday loans.
The interest can range as high as 660%, one of the highest in the country.
Instead consider a personal loan for emergency situations.
Going through a credit union will usually get you lower interest rates.
“There are some entities now that are created in conjunction with some of the banks and some of the agencies to try and give people alternatives to payday lending,” says Perryman. “Seeking those out is probably something that’s worth while to attempt to do.”
Both experts agree – building your credit whenever you can is a plus and can save you money in the long-run.
“If you have a low credit score because you missed payments or things like that, you can call each one (Equifax, Experian, TransUnion) and dispute it, send them letters to make it better,” says Warren.
