4 ways to wipe out credit card interest charges this August

Credit card debt has continued to soar across the nation, a clear indicator of how reliant Americans have become on their short-term borrowing options in this tough economic environment. The total amount of credit card debt nationwide is now sitting at a new record high of over $1.21 trillion, according to New York Fed data released this week. But high balances aren’t the only issue at play. With the average credit card interest rate hovering near 22%, more cardholders are also struggling to stay on top of their payments as the interest charges pile up. 

If you’re allowing your credit card interest charges to compound, it can be extremely tough to get your debt issues under control. After all, you’re allowing a portion of your balance to roll over from one month to the next, which means you’re being charged interest on not just the principal but also the prior interest your account has accrued, which can cause your balance to grow substantially in a short period. And, when interest is eating away at your payments, it’s important to consider how you can stop the cycle. 

Luckily, you can reduce or even wipe out credit card interest charges in a variety of ways, and often without a major overhaul of your financial life. What are the strategies you can use to help with that this August? That’s what we’ll detail below.

Find out how to start tackling your credit card debt today.

How to wipe out credit card interest charges this August

If you’re looking for ways you can proactively fight back and reduce or eliminate credit card interest charges, the following strategies may be worth considering:

Transfer your balance to a 0% APR credit card

One of the most effective ways to eliminate credit card interest is by transferring your existing balance to a card with a 0% introductory APR offer. Many credit card companies offer promotional interest-free periods, sometimes lasting as long as 21 months, on balance transfers. That allows you to focus on paying down your principal without the added burden of interest, which can be a game changer, especially if your card balances are high.

Keep in mind, though, that balance transfers typically come with a fee of between 3% and 5% of the transferred balance (on average), so you’ll need to do the math to make sure it’s worth the costs. But if you can pay off your balance within the 0% APR window, this option can save you a significant amount in interest charges.

Explore your debt relief options and get started with the right program now.

Enroll in a hardship program

If you’re facing significant financial strain and the interest charges on your credit cards are making the payments even more unmanageable, many credit card issuers offer hardship programs designed to assist those facing temporary financial setbacks. These programs vary by issuer, but often result in reduced interest rates or temporary pauses on interest charges, waived fees or even deferred payments for a certain period.

To take advantage of this option, you’ll need to reach out to your card issuer to explain your financial situation. While participation in a hardship program can have consequences on your credit score, and while you’ll have to qualify to enroll, it can provide you with immediate relief from today’s high rates. 

Use the statement date strategy

A lesser-known tactic is the statement-date strategy, which is an approach in which you pay off your balance before the closing date on your statement, allowing you to avoid interest charges entirely. This works because your credit card issuer typically calculates interest on the average daily balance from your statement date to your due date. By paying off your balance in full before the statement date (not just the due date), you can ensure that your balance is recorded as $0 or as low as possible. That, in turn, effectively eliminates the interest charges that would otherwise accrue.

Explore a personal loan to consolidate debt

If your credit card debt is significant and you’re struggling to manage multiple payments, consider taking out a personal loan to consolidate your credit card balances. Personal loans typically offer lower interest rates compared to credit cards, and using one to pay off your high-rate credit card debt stops compound interest from accruing further and saves you money on interest in the long run. 

Before choosing this option, though, you’ll want to compare loan rates and ensure the monthly payments are manageable within your budget. And, be mindful of loan fees to ensure that consolidating will truly save you money.

The bottom line

Credit card interest charges aren’t inevitable, even if you’re currently drowning in high-rate debt. The strategies above work, but they require action, preferably before next month’s expenses start piling up. Every month you delay making a move is another month of interest charges that could have been avoided, so start with whichever option feels most achievable for your situation, and don’t be afraid to combine strategies. Your future self and your bank account will thank you.