With the Federal Reserve raising interest rates these past few months (and more expected on the horizon), holding a balance on your credit card is now more expensive than it has been in years. Combine that with today’s high inflation and you have the potential for credit card debt to soar. But all is not lost. There are things you can do today (whether you already have a high credit card balance or just want to avoid one) to protect yourself financially.

First, a little background on how credit card interest works. Most cards have variable APRs that fluctuate based on standard benchmark; for example, your card may be 4% over the prime rate. For context, recent average APRs of credit cards have been as high as 19%.

If you carry a balance on your card, the card company will multiply your balance each day by a daily interest rate (this is your APR divided by 365) and add that as “interest” to what you already owe. For example, if your card’s APR is 19%, your daily rate is .052%. If you had a balance of $1,000 on day 1, then your interest for that day would amount to $.52, leading to a new balance of $1,000.52. This process continues on through the rest of the month, slowly gathering more in interest.

You can see why in an environment of rising rates, it’s critical that you are not only aware of the credit card debt you carry, but also make sure you’re actively using it wisely. Below are a few of our strategies for making sure you’re planning ahead and have the lowest interest rate possible.

• Build your credit score. Pay on time, pay down existing debt (and avoid taking on new debt), check your credit scores regularly, etc. All this will help you be in control of your credit score and a higher score can translate to lower credit rates.

• Rate shop (and negotiate). It is definitely worth shopping around when it comes to credit. Decide which features are important to you and then see what cards & offers are available that match your needs. Plus, in order to get you on board, they may be willing to match other rates.

• Pay off your credit card bill before the end of the month. If you pay your bill in full, then you won’t even be charged interest rates. That said, if you already are carrying a balance, we recommend putting as much money as you can towards your cards with the highest interest rates first. It will save you money on interest in the end.

• Review all your cards. If you have more than two cards with balances, these payments can cripple your finances. Most cards allow you to transfer your balance from other cards with a low interest rate. Consider consolidating your cards into one or two with low interest rates to streamline payments and give less room for error. Additionally, if you’ve been a good paying customer, you can try to negotiate your rate down.
  

Credit cards afford you freedom, but debt can catch up to you faster than you think. Make sure you are the one in control of your financial future.