Following the second rate increase implemented by the Federal Reserve in 2022, current credit card interest rates are rising. It is anticipated that five more will be implemented by the end of the year. Despite this, there are actions that you may do to protect yourself from the increasing interest rates.

If you make it a habit to pay off the whole debt on your credit card every month, the interest rate on the card is of little consequence. The grace period built into the terms and conditions of practically all credit cards ensures that the interest rate will never be an issue, regardless of how high or cheap, it may be compared to other options.

4 Ways to Avoid Credit Card Interest

The average interest rate on credit cards is rather high compared to other types of loans, which might make it difficult to stick to your budget. Here are four different methods that you might avoid paying to pay interest on your outstanding debt.

Pay Bill in Full Every Month

The grace period that comes with most credit cards is at least 21 days long and begins on the day that your monthly statement is sent out. During this period, you will not be charged any interest on your purchases if you pay the entire sum due on your card.

Keep in mind, however, that if you carry even a minor debt from one month to the next, you will lose your grace period on future purchases, which means that they will start incurring interest as soon as they are made. This will continue to be the case until the balance is paid in full.

Avoid Cash Advances

In contrast to new purchases, cash advances do not qualify for a grace period. Additionally, the annual percentage rate (APR) for cash advances is often greater than the rate you would pay for purchases. In addition, you will typically be levied a cash advance fee, which may be at least 5% of your advance. For all these reasons, it is preferable to steer clear of cash advances whenever possible unless the other choices are much more expensive, such as a payday loan.

Make the Most of Your 0% Introductory APR Periods

A wide variety of credit cards come with introductory APR promotions on new purchases that are either 0% or very low. Because of these special offers, getting financing for significant expenditures and making interest-free payments toward their reduction over time is much simpler. The initial 0% APR promotional period on credit cards may range anywhere from six months to twenty-one months, depending on the card. If you don't pay off debt in full by the time the promotional period is over, the card issuer will start charging you interest on the amount that's still outstanding on the card.

Make a game plan before you obtain the card to pay off the balance in full before the introductory 0% APR period expires. This is important regardless of how long the offer lasts. This is of utmost significance in the case of some shop credit cards since these cards may use a deferred interest structure rather than a genuine 0% APR deal. If you don't pay off debt on a credit card with deferred plan, card issuer will charge interest that is calculated backward depending on the amount initially owed.

Utilize Balance Transfers

Paying it off might take time if you have a significant load on your credit card. To our good fortune, a significant number of credit cards come with introductory APR rates on balance transfers that are also set at 0%. You can transfer part or all of your existing debt to the new card and then have anywhere from 12 to 21 months to pay off the amount without incurring any interest charges.

If you can plan things out correctly, you may be able to pay off the whole sum without paying to pay any further interest. However, it is important to remember that most balance transfer credit cards assess an upfront fee of between 3% and 5% of the amount being transferred. In addition, if you use the card to make new purchases while still paying payments on your balance transfer, those new purchases could not be eligible for a grace period unless the card also offers a 0% annual percentage rate (APR) on purchases.