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If you have credit card debt that you carry month to month, you may have noticed that your minimum payments are higher today than in the past – even if you have maintained a relatively static equilibrium. These higher benefits are the result of higher interest rates.
Currently, the Federal Funds Rate, the benchmark interest rate on which consumer interest rates are based, is paused at a 23 years high as the Federal Reserve tries to temper ongoing inflation concerns. And that means interest rates on everything from personal loans to credit cards have increased. But recent data shows that inflation is coolingso will your credit card debt get cheaper soon?
Find out today how a debt relief service can reduce the cost of your debts.
Does cooling inflation mean credit card debt will soon become cheaper?
So, will your Credit card debt is getting cheaper now that inflation is cooling?
“Keeping inflation at the 2% target level is one of two mandates the Fed is pursuing,” said Dan Casey, an investment advisor and founder of Bridgeriver Advisors, a financial planning firm. “If inflation cools, the Fed will most likely relax its current restrictive interest rate policy by lowering the Fed Funds Rate. This should have a trickle-down effect that will cause other interest rates, such as credit cards, to decline as well.”
However, that doesn’t mean there will be significant reductions in credit card interest rates anytime soon. For starters, the current inflation rate is still higher than the Fed’s 2% target. And although things are cooling, inflation in May was 3.3%, according to the latest data. So inflation may have to cool even further before the Fed cuts rates.
And if the Federal Reserve cuts Fed rates, it will likely do so in small increments. So even if the Fed decides to cut rates soon, it could take a while for card rates to drop enough to lead to substantial savings. So if you need that relief from high interest credit card debtWaiting for interest rates to drop may not be the best plan. Fortunately, there are other options you can pursue.
Don’t wait for interest rates to drop to get the relief you need.
Credit card debt relief options to consider now
If you’re trying to get relief from high-interest credit card debt, here are a few options to consider now:
- Debt settlement with credit card: Debt settlement with credit card companies may be able to settle your debts for less than you owe by negotiating a lump sum payment that is less than your current credit card balance. While these types of services can negatively impact your credit score, they can also provide significant savings.
- Credit card debt management: Debt management services may be able to negotiate lower interest rates on your behalf and help you manage your debts more effectively. This can be a good option if you can make your minimum payments but are having a hard time paying off your entire balance. And while there may be an initial negative impact on your credit score due to potential account closures, your credit may improve as you make your payments over time.
- Credit card debt consolidation: Of debt consolidation, you take out a new loan to pay off your high-interest credit card debt. The new loan typically has a lower interest rate compared to your credit cards, which can reduce the cost of your debt.
it comes down to
If the Federal Reserve cuts interest rates in response to cooling inflation, it could lower the cost of your credit card debt. However, there’s no guarantee that an interest rate cut will happen in the near future, and if it does, it could take a while before it impacts the cost of your credit card debt. If you need help with your credit card debt now, consider contacting a debt relief expert to discuss your options.
