The plan would be different if you are holding credit card debt. Especially, if you are in a position of expecting a hike in the rate you pay within a few statements. For example, the moment Fed funds rate hikes, many lending rates the banks are charging their customers would follow. On February 1 for instance, the average credit card debt rate was another record high of 19.95%. Bankrate predicted that it would be higher by 16.3%.
The best way to do this is to figure out the best balance-transfer card with an initial 0%. Then, you could plan to pay off what you owe for the coming months just before higher rates hit. McBride argued that credit card rates are still rising and at record highs.
It means that you need to turbocharge your debt repayment efforts with a 0% balance transfer offer. This would last around 12 months or a year. It could actually protect you from further rate hikes. Then it could give you a runway for paying the debt. However, first thing first you need to figure out key things. This is like the fees you need to pay such as an annual fee or a balance transfer fee.
You also need to consider the penalties you pay if you missed payments during the zero-rate period. It is vital because your remaining balance would be subject to another interest rate. In this position, the interest rate would be higher than you owned before, especially when the rate keeps rising.
Another option for if you don’t transfer to a zero-rate balance card, you could get a low fixed-rate personal loan. Because Bankrate said that the average personal loan rate now is around 10.6%. Meaning, the best rate you could have depend on your income, debt-to-income ratio, and credit score.