African-American couple using laptop and reviewing financial documents
African-American couple using laptop and reviewing financial documents

Interest busters! 3 ways to wipe out high-cost debt

Know your debt, and find your strengths

If you’re carrying less than $7,486 in credit card debt, congratulations. You’re paying less on high-interest debt than the average American.1

But even if you carry just $486 in monthly debt, the interest charged on that adds up quickly. So, we’ve got additional good news: There are ways in which average borrowers can liberate themselves from high-interest loans, which on credit cards alone is estimated at $120 billion annually.2

It starts with a basic assignment: figuring out what you’re paying in carry-over (month-to-month) debt. To prioritize what should be paid off first, you have to know the high-interest sources.

How to tell if you're carrying high-interest debt

Every loan or credit card has an interest rate that is set by the lender. That interest rate can make a big difference in how much the borrower ends up paying. The average interest rate on credit cards is now 23.39%. For those with a really good credit score, the average interest rate is just under 20%.3

So, on a credit card balance of $1,000 that carries from month-to-month, that “good rate” would add up to nearly $112 in interest for one year and nearly $340 over three years.4

But all loans are not the same and depending on type of loan, the interest rate can be even higher: The average interest rate on payday loans – small-scale loans that require short-term repayments – can climb to 300%.5

Not sure what interest rate you’re currently paying? You can typically find out your interest rate by looking at your monthly statement, viewing your account online or calling your lender.

To prioritize what should be paid off first, you have to know the high-interest sources.

Know your debt, and find your strengths

Lots of borrowers carrying debt face the “pay-or-save conundrum” – should they start saving more money now, or first pay down their debt? If the interest rate on a high-balance debt significantly exceeds what you could earn on a savings account or investment, it may make sense to pay off that debt first.6

But there are options besides the “two steps forward, one step back” cycle of high-interest debt obligations.

Strategies for basic debt consolidation

Paying off a debt can take time, particularly if interest rates continuously add to the balance owed. A borrower can request a lower interest rate from the lender, but getting one is not always guaranteed.

There are other, practical options a borrower can take to control and shift the debt into a lower-interest account. The following are three easy-to-access choices.

Move it with zero interest

Many credit card companies promote zero-interest balance transfers – accounts that do not charge interest on balances transferred from another credit card(s). At First Financial, all of our Visa credit card options, for example, include zero-interest balance transfers for the first 12 months, as long as the balance is paid in full within that time period. These types of transfers make it easier for you to pay down the balance quicker because you’re paying down the balance directly and you’re not getting charged interest each month which can make your balance grow. Before deciding to transfer your balance to another credit card, make sure you understand the terms and conditions and ask about any fees the lender may charge.

Take interest in lower-rate loans

For those who qualify, personal loans can provide another lower-interest option for consolidating and paying off debt. Personal loans typically have lower interest rates than credit cards (if you’re not taking advantage of a 0% balance transfer offer) and repayment terms can range from 6 to 60 months.

When you use a personal loan to pay off multiple other loans or credit cards, you’re combining all those outstanding balances into one monthly payment. Consolidating debt together like this makes it easier to pay off your balances within a certain timeframe without getting overwhelmed. We offer several competitive personal loan options here at First Financial. You can compare our low rates and repayment terms here.

Appreciate the value of your home

The amount of money homeowners pay to reduce what they owe on a house goes toward their home equity. On a monthly mortgage payment, it is represented by the principal, not the interest portion of what’s owed. So the difference between what you still owe on the home (say, $50,000) and what it is worth ($350,000) equals its total equity ($300,000!). You can use your home’s equity to pay off a range of expenses – including high interest debt. There are three common home equity options:

  • The home equity installment loan – This is a loan made in one lump sum of the approved loan amount) that can be paid off over a fixed period of time.
  • The home equity line of credit (HELOC) – This is a predetermined amount of money, or line, that the borrower can repeatedly draw from and repay as the funds are needed.
  • The fixed-rate lock home equity line of credit (HELOC) – This is an option the borrower may take advantage of to convert a portion of the outstanding HELOC balance to a fixed rate and a fixed term. The remaining line of credit balance will be available at a variable rate.

Our f1RST tip: to outstep debt, with prevention

There’s one last option for eliminating high-interest debt, and that’s by better understanding the options for avoiding it. If you’re concerned about debt, or face circumstances that could cause debt to climb, one of our bankers can talk with you about it and find a solution that best fits your situation.

If you’d like to send us a message about a credit card or loan applications, a new account, or an existing account, reach out to us here.

Whatever your high-interest debt is, we'll give you credit for stepping in front of it.

1 “A growing number of Americans face potentially crippling credit-card debt,” By Daniel De Visé, The Hill, Jan. 21, 2023;

2 “Americans pay $120 billion in credit card interest and fees every year,” By Ashwin Vasan and Wei Zhang, Consumer Financial Protection Bureau, Jan. 29, 2022;

3 “Average Credit Card Interest Rate in America Today,” By Matt Schulz, Lending Tree, Jan. 20, 2023;

4 “Here’s What a $1,000 Credit Card Balance Could Cost You in Interest,” By Maurie Backman, The Ascent/A Motley Fool Service, July 21, 2021;

5 “What is high interest rate and how to lower it,” By Marty Arneberg, Guaranteed Rate, June 2, 2021;

6 “What it means when financial planners say you should pay off 'high-interest debt' before saving,” By Liz Knueven, Business Insider, Sept. 15, 2020;

The information on this page is accurate as of April 2023 and is subject to change. First Financial Bank is not affiliated with any third-parties or third-party websites mentioned above. Any reference to any person, organization, activity, product, and/or service does not constitute or imply an endorsement. By clicking on a third-party link, you acknowledge you are leaving First Financial Bank is not responsible for the content or security of any linked web page. Member FDIC / Equal Housing Lender.


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