Interest rates are coming down: That's the consensus expectation following Federal Reserve Board Chair Jerome Powell's comments at the annual central banking symposium in Jackson Hole, Wyo.
"The upside risks to inflation have diminished. And the downside risks to employment have increased," he said Aug. 23. "The time has come for policy to adjust."
The remaining questions involve judgements about how aggressive the Fed will be in lowering rates. However, one interest rate is unlikely to come down much if at all: credit card rates.
The average annual percentage rate for credit cards with a balance is almost 23%. People with good credit scores and low debt-to-income ratios often do better than that and vice versa. Still, credit card rates are high on balances.
Credit card debt is growing, hardly surprising considering the high employment rate and healthy economic growth. Yet there are increasing signs more people are feeling financially strained from their credit card debts. There isn't a magic formula for quickly eliminating credit card debt. But there are time-tested solutions that work.
Among the key steps for those with reasonable prospects of paying off their credit card debts on their own: Figure out how much you owe; create a budget; siphon savings toward debts; have a plan that lays out which debts to tackle first, second and so on; and finally, remember small steps add up over time.
Start off by asking yourself, am I more like Spock or Dr. McCoy; Sherlock Holmes or Dr. Watson; Hercule Poirot or Captain Hastings (depending on your reading and television preferences!). Logic will appeal to you if you identify with Spock, Holmes and Poirot. Make a list of your credit card debts, starting with the highest rate and ending with the lowest rate card. Pay the minimum on your cards except the highest rate one. That's where you target the extra savings. When it's paid off, move on to the next highest-rate debt and so on.
However, emotions and not logic rule for the Dr. McCoys, Watsons, and Captain Hastings of the world. Ignore the interest rate. Instead, list your credit card debts by the amounts you owe. Tackle the smallest bill first. Pay the minimum on everything else. You'll enjoy the early reward of paying off a card. Success means you're now more likely to stay the course and eliminate the next-smallest debt.
Chris Farrell is senior economics contributor, "Marketplace"; and a commentator for Minnesota Public Radio.