NORFOLK, Va. - You hear people say that credit cards can be like a double-edged sword; a nice safety net, but if over-used can put your finances in big trouble.
With current rates rising, payments are harder for people to pay down.
"The average interest rate on a new credit card offer is over 21%. And even for folks with the best credit, that interest rate is probably going to be about 18%," said Matt Schulz, Chief Credit Analyst at LendingTree.
Because of the high interest rates, more people are stuck in debt. If your credit is low, the interest rate will be higher, therefore it takes longer to pay off. Lenders use high interest rates to protect themselves if borrowers don't pay.
Still, the rates aren't sitting well with people. Individuals of all political parties, ages, and incomes believe that more needs to be done to protect consumers.
"More than 80% of folks said they agreed with the statement that 'more laws and regulations are needed to protect credit card holders,'" said Schulz.
LendingTree surveyed more than 1,200 credit card holders between the ages of 18 and 76. While more than 80% of people surveyed agreed they wanted to see more protection, the likelihood of sweeping change is unlikely. However, there are two possible solutions being discussed by the government.
In June, the Consumer Financial Protection Bureau announced it's gathering information from people who have credit cards ahead of proposing new rules about late fees.
The White House is also pushing to eliminate "junk fees." Junk fees are hidden fees, like credit card late fees or overdrafts on your checking account. The White House Competition Council is trying to come up with a way to erase or lessen these charges.
While all of those details have yet to be announced, if you want to take action now Schulz said, "the good news is that you do have options 0% Balance Transfer Credit cards are out there, personal loans are out there [and] you can make a call to your issuer and ask for a lower rate."
Schulz said to protect yourself:
- Pay down your credit card debt
- Consider 0% balance transfer cards and low-interest personal loans
- Ask for help
- Build your emergency fund
