While Federal Reserve rate cuts might slightly lower credit card APRs.
Federal Reserve Rate Cuts Expected: A Potential Boost for Credit Cardholders Struggling with Debt
As the Federal Reserve plans to cut interest rates with three reductions expected in the second half of 2024 and three more in 2025, people may hope for relief from credit card debt. Lower Fed rates typically lead to reduced credit card APRs. For instance, a 0.75% Fed rate cut could lower a credit card’s APR by the same amount easing the burden slightly, according to the report of The Motley Fool.
(photo: CNBC)
More Effective Ways to Manage Credit Card Debt
However, credit cards will still be costly even with these cuts. For example reducing an APR from 23.99% to 23.24% means monthly interest drops from $158.95 to $153.98 but it remains high. The Fed’s rate cuts won’t drastically lower the cost of credit card debt.
For more significant relief, consider other options. Balance transfers can offer lower or 0% APR for a year or more though they come with fees. Personal loans provide fixed payments and often lower rates making them a potentially more effective way to manage and reduce debt than waiting for Fed rate cuts.
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