Given the current high interest rates, it is advisable to avoid accumulating more credit card debt.

The Federal Reserve is expected to raise interest rates even further before the end of the year. In fact, the average credit card interest rate is already at an all-time high. According to WalletHub, the average rate for existing accounts is currently 22.77%, the highest it has been in 30 years.

Automated payment options can help credit card holders avoid late payment fees. However, a study conducted in 2022 found that cardholders who use automated payment features tend to pay off less of their monthly balance compared to customers who make manual payments.

Experts warn that if cardholders don’t pay their statement balance in full each month, they will end up paying more in interest in the long run. Setting up a lower monthly automated card payment may seem convenient, but any unpaid balance will accrue interest charges.

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To avoid paying more in interest and fees, experts recommend setting up credit card automated payments to cover the entire statement balance. It’s important to note that you only need to pay the statement balance in full each month to avoid interest charges, even if your account shows a “current” balance that includes newer charges.

If you can’t pay your statement balance in full, it is crucial to make smaller payments regularly to stay current and reduce your overall balance. Failing to do so can result in hefty late fees on top of accrued interest.

You can pay off your statement or current balance at any time without penalty charges. According to Nick Ewen, the director of content at The Points Guy, there is no penalty for paying your statement balance before the due date.

Best Practices for Credit Card Holders

1. Move the due date closer to your payday

   Ask your lender if you can change your card payment due date to a few days after your paycheck is deposited. This way, you can ensure that you have enough money in your checking account before a scheduled automatic card payment goes through, preventing overdrafts.

   Check your credit card account online or contact customer service to find out how to make this change.

2. Watch out for penalty APRs

   Be aware that zero percent annual percentage rate (APR) offers usually last for 12 to 18 months. However, failing to make a minimum payment can result in the card issuer revoking the 0% APR offer and imposing an APR of 29% or higher. It is important to read the fine print and make all payments to maintain the promotional rate. Additionally, make sure to pay off the full balance before the promotional period ends to avoid interest charges.

3. Consider a balance transfer or product change

   If you have existing credit card debt, you might want to consider a balance transfer. Some credit cards offer a 0% APR for balance transfers, typically with a one-time fee of 3% to 5% or a flat fee of $5. This allows you to transfer your balance to another card and have a specified period, such as 12 months, to pay off the balance interest-free. Make sure to pay off the balance before the introductory special expires.

   If the terms of one of your credit cards change, larger credit card companies often offer the option to change to a different product instead of closing the affected card. This can be beneficial if you have a high-fee credit card and want to maintain a high credit line. Contact your card provider to inquire about product change options.