Have you noticed your credit card interest rates have been rising? The Federal Reserve raised rates several times in 2022 and has plans to continue to raise them throughout 2023 to combat inflation. The reason many of your credit card rates have increased is that most credit cards have a variable interest rate that is tied to the U.S. Prime Rate. When the federal funds rate (Prime Rate) increases, your credit card issuer will likely raise your APR as well. A higher prime rate means more expensive borrowing costs. This not only relates to credit cards, but auto loans, home loans, and more.

Because credit card interest rates have been rising, it’s smart to pay off balances before the interest accruing becomes overwhelming. Many credit card companies calculate the interest you owe daily, based on your average daily balance. If your card has a grace period, which most do, you can avoid paying interest on purchases by paying off your balance in full each month. If you’re confused, you can review your credit card account agreement for specifics. Here are some tips for paying off your credit card debt.

3 Strategies to pay off credit card debt

 1 Pay off a high credit card balance with a low-rate personal loan 

With federal rates at their highest point in more than a decade, lenders are passing those rate hikes on to borrowers. According to Investopedia, the median available credit card rate they track exceeds the Federal Reserve Average and is currently 22.74%. Now that’s a high interest rate. If you are facing climbing credit card interest rates, paying them off with a fixed-rate debt consolidation loan, such as a low-rate personal loan, can be a financially smart decision.

For example, Guthrie Community Credit Union is currently offering a fixed-rate personal loan for a 12-month term with a rate as low as 7.74% APR*. That is just a little over one-third of the average credit card rate that Investopedia mentioned and a significant savings for borrowers looking to save on interest. Not only is it a lower rate, but it is a fixed rate for the entire term of the loan and will be unaffected by Fed rate increases. You will have one payment that’s easier to budget for each month. Tap to view Guthrie Community Credit Union personal loan rates and terms. Tap to learn more, view a loan calculator, or apply for a personal loan.

2 Transfer the balance of a high-rate credit card to a lower-rate card 

If you’re considering a credit card balance transfer for addressing rising interest rates, look for a non-variable rate credit card. Guthrie Community Credit Union provides a VISA card with the following benefits:

  • No annual fee
  • A low, non-variable rate
  • No balance transfer fees

Tap to view GCCU credit card rates.

The key to using a balance transfer credit card to consolidate high-rate credit card debt is paying down the balance as soon as possible.

3 Pay more than the minimum

Finally, if you decide to focus on paying down your high-rate debt as it stands or transferring it to a lower-rate balance transfer card, we encourage you to always pay more than the minimum payment due. You should adjust your budget to pay as much of your full credit card balance as possible each month. This will help limit the interest you will be paying over time. Automating your payments will allow you to commit to a monthly budget for reducing credit card debt.

Paying down high-rate credit card debt now is critical to minimizing the impact of future Fed interest rate hikes. We hope our strategies to pay off credit card debt help you make an informed decision.

Want to learn more? Read our blog “Plan Ahead: How rising rates can make your debt more expensive.”


*APR = Annual Percentage Rate. Certain restrictions may apply. The rate differs according to the term and borrower’s credit history. The rate you receive is based on your credit score and term. Approval for financing is subject to current lending guidelines and credit qualifications. Membership eligibility is required. No application fee or prepayment penalty. Additional terms, conditions, and restrictions apply. Rates are subject to change without notice. Rates as not applicable for existing Guthrie Community Credit Union Loans. New money only. Credit Union reserves the right to discontinue this special at any time and without notice.