7 On Your Side: Money moves to make now after Fed's interest rate hike
NEW YORK (WABC) -- You've no doubt read the news, the Federal Reserve raised short-term interest rates by three quarters of a percentage point, the largest increase in nearly 30 years.
But what does this mean for you?
Matt Schulz is a credit card pro with Lending Tree, an online marketplace for consumers to shop the best rates on home loans and credit. His number one tip to take away from the recent federal rate hike: Transfer your credit card debt to a 0% interest card.
"The Federal Reserve just raised interest rates, and when that happens, virtually every credit card in America goes up by that same amount in about a billing cycle or two," he said. "A zero percent balance transfer card can be an absolute Godsend for folks who have credit card debt, because they can give you basically 12 months, 15 months, up to 21 months, without having to pay any interest on that transfer and balance."
It's a bad time to be in debt, especially if you're juggling high balances on multiple credit cards.
"I got to the point where I had nine credit cards," credit card customer Ryan Masajo said. "Six of them were fully maxed out."
You can also consider a debt consolidation loan.
Masajo took out a personal loan to consolidate six credit cards into one payment with a lower interest rate. He used SoFi, an online one-stop shop for personal finances.
"7.5% compared to anything from 9% to 25%," Masajo said.
SoFi's financial planners say rising rates are the perfect time to refinance your debt but warns that taking out a loan isn't for everyone.
It requires discipline to stay on budget.
"You're really making sure that you can stop the behavior that got you into debt before you can think about getting out of debt," said Brian Walsh, a SoFi certified financial planner.
If you don't want to take on a loan or don't qualify, ask your current credit card issuer to consider lowering your interest rate.
You have a better shot if you're a long-time customer with good standing.
"You don't have to sit back and just accept your interest rate going up," Schulze said. "You can call your credit card issuer and ask them for a lower interest rate, and about 70% of people who do that get their way. And the average reduction is about seven percentage points, with far too few people ask, and it's a really big deal."
One thing that is certain is if you don't ask for an interest rate adjustment, you won't get one.
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