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It's time to pay off those credit card balances

The cost of borrowing money is going up. That’s what the Federal Reserve wants. It raised its short-term interest rate this week which caused banks to boost their prime rate. And that will drive up the rate for loans that are based on the prime.

“You're going to feel this first on variable rate debts, like credit cards, home equity lines of credit and adjustable-rate mortgages,” said Greg McBride, chief financial analyst at Bankrate.com. “These are going to be your biggest exposures as interest rates continue to rise."

Rising interest rates mean its time to deal with your credit card debt. Credit card interest rates are some of the highest most people will pay. The nationwide average right now is about 16 percent, according to Bankrate. As rates go up, those unpaid balances cost you more.

"Look to lock in fixed-rates on credit cards and bag those zero percent and other-low rate balance transfer offers now while you still can,” McBride suggested. “Do what you have to do to get that debt paid off once and for all because the cost of carrying that debt is only going to go up as interest rates climb.”

And it’s a pretty sure bet that’s going to happen since the Fed expects to raise interest rates two more times this year.

More Info: How the Fed's Interest-Rate Hike Affects Consumers

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