Understand the Credit Card World and Save


Don't those fancy credit card offers seem to arrive as often as flyers for air duct cleaning?

If you’re not careful with the fine print with a new credit card, your wallet may experience an unwanted cleaning of its own.

Stress for credit card users began to heat up in March of last year when the Federal Reserve began to raise its key interest rate.

It would be the first of 10 rate bumps in just over a year.

Each time the Fed raises the rate, the lending rates financial institutions charge their customers typically follow. That means consumer debt becomes more expensive.

“The average credit card rate is now at a record high above 20%,” said Greg McBride, chief financial analyst for Bankrate.com.

Specifically, the rate was 20.23% as of April 26, 2023. That’s well above the 16.3% average at the start of 2022.

The average rate on credit cards is rising, and balances are also mounting.

According to Experian, the average credit card balance rose by double digits in 2022 after falling for two years. The average credit card balance as of Q3 2021 was $5,910. That’s 13.2% higher than the 2021 average balance of $5,221.

We won’t consider annual fees or late charges into the equation. However, one late fee may trigger a huge rate increase – and possibly put an end to a “0%” offer by a big bank.

It all adds up too fast for the average consumer in actual dollars.

Boiling things down in simple terms, to pay off $5,910 in 36 months, you would pay $220.33 a month. After three years, you would pay just over $2,000 in pure interest.

Here’s the good news.

With an interest rate of 6.90% APR, your monthly payment would drop to $182.20. The total interest amount would only be $650, less than a third of the average amount.

Polish-American Federal Credit Union’s Preferred Platinum Visa Card offers a 6.90% APR, one of the lowest regular rates in the country.

Members also receive one reward point for each dollar spent. Points may be redeemed for travel rewards, discounts on fuel, a long list of merchandise, or even credit on the card’s balance.

Keep in mind PAFCU never charges a balance transfer or annual fee.

Most know the best advice is to pay off your credit card debt each month. Many of our members do. Yet when unexpected or large purchases pop up, using a low-rate credit card like PAFCU’s Preferred Platinum Visa Card is the smartest way to save money.

Please call PAFCU today at (248) 619-0440. You may be enjoying substantial savings soon.

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