CBS News
3 reasons to pursue credit card debt consolidation this October
Getty Images
The Federal Reserve’s first rate cut of the year was conducted last week and it reduced the benchmark rate by 50 basis points to a range of 4.75% to 5% — a cut that was twice as high as many analysts expected. That’s good news for borrowers, as the substantial rate cut could make loans more affordable, as lower rates generally ease borrowing costs. Not all debt is created equal, though, and the effects of the Fed’s rate cut won’t trickle down evenly across all types of borrowing.
For example, the rate cut might not bring immediate or even noticeable relief for those burdened by credit card debt. After all, the average interest rate on credit cards is closing in on 23%, far outpacing other types of loan rates. The Fed’s rate changes also typically have the most immediate impact on larger borrowing categories, such as home loans, with credit card APRs taking longer to adjust, if they adjust at all. So while mortgage borrowers might benefit from this rate cut soon, cardholders are unlikely to see a major reduction in their interest payments in the near future.
As a result, cardholders may want to search for other ways to better manage their high-interest debt and one option is credit card debt consolidation. By consolidating debt into a lower-interest loan, borrowers may be able to save money and simplify payments — and there are a few reasons you may want to consider this debt relief option right now in particular.
Learn how debt consolidation could benefit you here now.
3 reasons to pursue credit card debt consolidation this October
Consolidating your credit card debt could make a lot of sense this October. Here’s why:
The Fed rate cut won’t provide much relief
While the Federal Reserve’s 50 basis point rate cut may seem promising, it’s not going to help much for those already saddled with high-rate credit card debt. Credit card APRs often remain sticky, meaning they do not fall immediately or significantly following Fed rate cuts. So, waiting for relief from dropping credit card rates may not be the best plan.
But even if credit card interest rates decrease by the same 50 basis points as the Fed rate cut, it would still leave them at nearly 22.5%, which is extremely high compared to other borrowing options. When a rate is that high, a slight reduction won’t provide meaningful relief for cardholders who are struggling with compounding balances.
By comparison, personal loans, which are often used for debt consolidation, currently offer average rates of about 12.5% — and average rates on home equity loans, which can also be used for the same purpose, are even lower right now. That’s a substantial difference from the average credit card interest rate, especially for those carrying large balances. So rather than waiting for credit card rates to potentially drop by a fraction, consolidating your debt into a loan with a lower rate can offer more immediate and tangible savings.
Find out how much you could save with the right debt relief strategy now.
Debt consolidation has numerous benefits
Debt consolidation isn’t just about lowering interest rates. It can also simplify your financial life and make managing your debt far more efficient. By taking multiple high-interest credit card balances and rolling them into one lower-rate loan, you reduce the overall interest you pay over time and, in many cases, lower your monthly payment as well. This creates an opportunity to pay down debt faster and more efficiently.
For example, let’s assume you have $10,000 in credit card debt at an interest rate of 23%. Making only minimum payments would stretch out repayment for years and could cost thousands of dollars in interest. If you consolidate that debt into a personal loan with a 12.5% interest rate, you could save hundreds or even thousands in interest payments, while also having a clear timeline for when the debt will be paid off.
The longer you wait, the more expensive your debt becomes
Credit card debt will grow quickly if left unchecked. Due to compounding interest, if you’re making only minimum payments each month, you could see your balances rise, even if you aren’t making new purchases. And the longer you wait to address that high-rate credit card debt, the more difficult it becomes to climb out of the financial hole, as every extra month you carry a balance increases the amount of interest you’re paying.
By consolidating your debt now, though, you can prevent the situation from getting worse. The sooner you move high-interest credit card balances into a lower-rate loan, the less interest you’ll accrue over time. This will make it easier to manage and eliminate your debt sooner, providing not just financial relief but also peace of mind.
The bottom line
While the Federal Reserve’s recent rate cut may help some borrowers with lower-interest debts, it won’t do much for those struggling with high-rate credit card debt. And with the average credit card APR at nearly 23%, the compounding nature of this debt can quickly make it overwhelming. But debt consolidation offers an attractive solution to this problem, allowing cardholders to reduce their interest rates, lower their monthly payments and tackle their balances more effectively. The longer you wait, though, the more expensive your credit card debt will become, so taking action now is key.
The International Brotherhood of Teamsters says workers at seven Amazon facilities will begin a strike Thursday morning in an effort by the union to pressure the e-commerce giant for a labor agreement during a key shopping period.
The Teamsters say the workers, who authorized walkouts in the past few days, are joining the picket line after Amazon ignored a Dec. 15 deadline the union set for contract negotiations. Amazon says it doesn’t expect any impact on its operations during what the union calls the largest strike against the company in U.S. history.
The Teamsters say they represent nearly 10,000 workers at 10 Amazon facilities, a small portion of the 1.5 million people Amazon employs in its warehouses and corporate offices.
Amazon is ranked No. 2 on the Fortune 500 list of the nation’s largest companies.
At a warehouse in the New York City borough of Staten Island, thousands of workers who voted for the Amazon Labor Union in 2022 and have since affiliated with the Teamsters. At the other facilities, employees – including many delivery drivers – have unionized with them by demonstrating majority support but without holding government-administered elections.
The strikes happening Thursday are taking place at an Amazon warehouse in San Francisco and six delivery stations in southern California, New York City, Atlanta and the Chicago suburb of Skokie, Illinois, according to the union’s announcement. Amazon workers at the other facilities are “prepared to join” them, the union said.
“Amazon is pushing its workers closer to the picket line by failing to show them the respect they have earned,” Teamsters General President Sean M. O’Brien said in a statement.
“If your package is delayed during the holidays, you can blame Amazon’s insatiable greed. We gave Amazon a clear deadline to come to the table and do right by our members. They ignored it,” he said.
The Seattle-based online retailer has been seeking to re-do the election that led to the union victory at the warehouse on Staten Island, which the Teamsters now represent. In the process, the company has filed a lawsuit challenging the constitutionality of the National Labor Relations Board.
Meanwhile, Amazon says the delivery drivers, which the Teamsters have organized for more than a year, aren’t its employees. Under its business model, the drivers work for third-party businesses, called Delivery Service Partners, who drop off millions of packages to customers everyday.
“For more than a year now, the Teamsters have continued to intentionally mislead the public – claiming that they represent ‘thousands of Amazon employees and drivers’. They don’t, and this is another attempt to push a false narrative,” Amazon spokesperson Kelly Nantel said in a statement. “The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union.“
The Teamsters have argued Amazon essentially controls everything the drivers do and should be classified as an employer.
Some U.S. labor regulators have sided with the union in filings made before the NLRB. In September, Amazon boosted pay for the drivers amid the growing pressure.
NEW YORK — The Teamsters union is launching a strike against Amazon at numerous locations across the country, including in Maspeth, Queens.
The Teamsters are calling it the largest strike against Amazon in United States history, and it’s set to begin at 6 a.m. Thursday. In addition to New York City, workers will be joining picket lines in Atlanta, Southern California, San Francisco and Illinois.
In a video announcement released Wednesday night, workers voiced their frustrations.
“Us being strike ready means we’re fed up, and Amazon is clearly ignoring us and we want to be heard,” one worker says in the video.
“It’s really exciting. We’re taking steps for ourselves to win better conditions, better benefits, better wages,” another worker in the video says.
The union says it represents about 10,000 Amazon employees and that Amazon ignored a deadline to come to the table and negotiate. The $2 trillion company doesn’t pay employees enough to make ends meet, the union asserts.
At the height of the holiday season, many are wondering what this means for packages currently in transit.
Teamsters President Sean O’Brien said, “If your package is delayed during the holidays, you can blame Amazon’s insatiable greed.”
Amazon says Teamsters are misleading the public
An Amazon spokesperson says the Teamsters are misleading the public and do not represent any Amazon employees, despite any claims.
“The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union,” the spokesperson said in a statement.
An Amazon representative says the company doesn’t expect operations to be impacted.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.