Credit card interest rates exceed 21% for many consumers

With average credit card interest rates exceeding 21%, consumers—particularly retirees on fixed incomes—face significant costs when carrying balances. While banks often pay less than 1% interest on savings, they profit heavily from the gap between savings rates and high credit card APRs.

One method to mitigate these costs is the use of balance transfers. Major card issuers offer introductory 0% APR periods, often lasting between 15 and 21 months, to attract customers with good to excellent credit. By moving an existing balance to a new card, typically for a one-time fee of 3% to 5%, cardholders can ensure their monthly payments go toward reducing the principal balance rather than servicing interest.

For an individual carrying a $6,800 balance at a 21% interest rate, interest charges can amount to approximately $1,400 annually. Utilizing a 0% introductory period can result in thousands of dollars in savings and more effective debt reduction over the duration of the offer.