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3 Ways To Use Interest Rates To Lower Your Household Debt


According to the Federal Reserve Bank of New York, total household debt rose by $184 billion to hit more than $17 trillion in the first quarter of 2024. Balances on auto loans increased $9 billion to $1.62 trillion. And while credit card balances fell in the first quarter, which is common after the end-of-year holidays, nearly 9% of credit card balances moved into delinquency.*

As troubling as these figures are, what most of us care about is our level of debt and how to bring it under control. Managing how much interest you’re paying plays a significant role in lowering your household debt. Here are three ways to use interest rates to lower your household debt.

1. Lower the cost of owning a car.
Let’s start with auto loan interest. If you’re in the market for a new or used car, spend time researching interest rates in addition to cars.

With the average price of a new car exceeding $45,000 and a used car averaging $26,000, interest rates significantly impact your monthly budget. The average auto loan rate for an excellent credit score (750 or higher) is 12.77% APR for a new car. And 13.02% APR if you’re shopping for a used car. If your credit score is low, expect to pay a high interest rate.** Don’t know your credit score? Enroll in Tulee, our digital banking platform, to get your FICO® Score monthly for free. You’ll also find helpful tips in the Tulee Credit Score Tool to help you improve your credit score if it isn’t as high as you want.

Once you decide on the car to buy, consider us for your auto loan. Rates begin at just 8.49% APR† when you sign up for Direct Deposit, saving you hundreds of dollars yearly. If you have a high-interest auto loan, consider refinancing. Our auto loan refinance rate starts at 9.49% APR.

Whether you get a new loan with us or refinance an existing auto loan, you can use the money you save on interest to pay for gas or apply it to your insurance payment. We also offer impressive loan rates on motorcycles, motorhomes, boats, and personal watercraft.

2. Lower the cost of using a credit card.

Credit cards are an integral part of life. However, as of this writing, the average credit card interest rate is 27.65% APR!§ In other words, if you don’t pay off your total credit card balance every month, you’re increasing the amount you owe by 27.65%. Imagine you owe $1,000 and only pay $25 a month to the credit card company. You’ll pay $795 in interest over 112 months before your balance is zero. And that’s assuming your don’t use that credit card for any additional charges.

Here’s another reason to ditch your high-interest credit card. The interest rate on our Select Visa® is as low as 8.99% APR#. Right now, you can get a 0% introductory APR for six months, and a $100 bonus when you spend $5,000 in purchases within the first 3 months of activating the card.

3. Increase your savings with high interest rates.

Now that you’ve lowered the interest rate on your auto loan and credit cards, let’s talk about the pluses of high interest rates; specifically higher savings rates. We understand why many are rooting for the Fed to lower interest rates, which should also lower auto loan and credit card rates, but this move will also impact the yield on savings rates, money that can help lower your household debt. Our Online Savings account earns 4.00% APY1 with Direct Deposit (3.50% APY without it). There’s no minimum deposit. And there are no maintenance fees, saving you money. To earn even more, our Flex-Term Certificate pays an impressive 5.00% APY2 for 3, 6, 9, and 12 month terms. All you need is a $1,000 to open an account. If you’re looking for longer-term gains, get 4.50% APY3 for 18, 24, 36, 48, 60 month terms.

Final thoughts.

Lowering your household debt is critical to both your financial well-being and mental wellness. Securing lower interest auto loans and credit card interest rates is a great step in managing your finances. On the flip side, using high interest yields to put more money in your pocket is a savvy way to help balance your monthly budget. To dive a bit deeper into your household debt and income, take our free Financial Wellness Check. It’s a simple way to learn how to grow wealth more efficiently, avoid financial pitfalls, and keep you on the path to financial freedom. If you need help opening or applying for an auto loan, credit card or saving account, visit us online or call 800.877.2345.

*Federal Reserve Bank of New York, “Household debt and Credit Report (Q1 2024),” Accessed 23 May 2024.

**Vincent M. John, Deaton, Page Jamie, Shrestha Rusha, “Average Auto Loan Rates in March 2024,” 5 February 2024. Accessed 23 May 2024.

†, APR=Annual Percentage Rates. Rates shown are our preferred rates based on credit worthiness and a 0.50% Auto Loan discount for Direct Deposit/Folio Direct Deposit going into a FIGFCU Checking Account (either High Yield or CashBack) in the amount of $1,000.00 or more monthly and Automatic Payment/Folio Deduction. Rates and terms are subject to credit approval. Other rates and terms are available. Other restrictions may apply. Financing available up to 130% of the Purchase Price, including tax, license, warranties and negative equity on a trade for qualified borrowers. Please speak with a Loan Representative for complete details and qualifying criteria. Rates and terms are subject to credit approval, are subject to change at any time and without notice. All values are determined by the Credit Union using either vehicle cost or Kelly Blue Book/NADA, whichever is lower. Other rates and terms are available.

§Black, Michelle, “What is the average credit card interest rate this week? May 23, 2024,” 20 May 2024. Accessed 23 May 2024., “Credit Card Payoff Calculator,” Accessed 23 May 2024.

#$100 Bonus for New Credit Cards for: Crystal Visa, Select Visa & Visa Platinum: A $100 (one hundred dollars) bonus will be paid in the form of “Visa Statement Credit” when at least $5,000.00 (five thousand dollars) is spent in purchases within the first 3 months (qualifying period) of the “New” Visa card opening. Bonuses will be paid out within 90 days after the qualification period. Example: If a card is activated on January 1, 2021 and the total of qualifying purchases for the months of January, February and March is at least $5,000, the primary borrower will receive a Bonus of $100 (one hundred dollars) no later than July 1, 2021.  Limit of one reward/bonus per member number. Qualifying transactions must “post” to the designated account during the qualified period. All qualifying purchases will count towards the $5,000 in spent purchases unless return for credit of any of the qualifying transactions takes place within 90 days of the end of the qualifying period. Transactions may take two business days from the date of purchase to post. Member must be in good standing to be eligible for bonus. New accounts are subject to FIGFCU approval and all other terms and conditions apply. This offer is valid only for individual account /card holders, is non-transferable and cannot be combined with any other offer. The $100 Bonus is a product promotion sponsored by FIGFCU and may be discontinued at any time.  Visa is a registered trademark. APR = annual percentage rate. Rates are subject to change at any time.

The balance transfer amount from other Farmers Insurance Federal Credit Union credit cards will retain its current rate (i.e., Select Visa at 8.99% – 18.00%, Visa Platinum at 10.99% – 18.00%, until the transferred balance is paid off. APR=Annual Percentage Rate. Rate quoted is the lowest rate possible for qualified borrowers and is subject to change. Qualification is based on credit history, debt, and the ability to repay. Your rate may vary. All loans subject to credit approval. The newly opened Credit Union credit card’s rate will only apply to new transactions. Any balances on the previous Credit Union credit card must be paid off at the prior credit card’s rate.

Zero Percent (0%) Introductory Rate Promotion for purchases, is offered for new FIGFCU Select Visa® Credit Card account holders. This incentive offer, is not available to those members who are opening a new Select Visa and had an outstanding balance or a closed FIGFCU Zero Percent Loan account and/or had any FIGFCU Select Visa® Credit Card within the last year. If you are in an introductory rate promotion period, you are not eligible to transfer other loan balances, line of credit balances, credit card account balances or CASH Advance to take advantage of the introductory rate promotion.

The program promotion may be modified, suspended or cancelled or may be changed at any time without notice and without restriction or penalty. Farmers Insurance Federal Credit Union reserves the right to change the promotion rates and program retention period from time to time. You will be notified of any expiration or program changes as required by law. Contact Farmers Insurance Federal Credit Union for details on applicable conversion to current rate and payment options which are then in effect. At Farmers Insurance Federal Credit Union’s sole discretion, the program offering of the program may be terminated, for any reason, including but not limited to a “Rules Violations”, your Farmers Insurance Federal Credit Union account is not in good standing or is suspected of fraud, or if you move to another Farmers Insurance Federal Credit Union credit card.

This program is void where prohibited or restricted by law. You are responsible for any federal, state, or local taxes.

Effective Offering Dates: Promotion period for Zero Percent (0%) introductory is effective for FIGFCU Select Visa® Credit Cards opened beginning July 20, 2020 through “until further notice”.

Loss of Introductory APR: We may end your introductory APR and/or apply the Penalty APR if you make a late payment or are Over limit.

Billing Rights: Information on your rights to dispute transactions and how to exercise those rights is provided in the Billing Rights section of the Visa® Credit Card Agreement.

Introductory rate and incentive offers for Select Visa®, are not available to those members who had an outstanding balance on a preexisting or closed FIGFCU Visa Credit Card account and/or had an FIGFCU Visa Credit Card within the last 12 (twelve)  months. If you are in an introductory rate promotion, you are not eligible to increase limits until the introductory rate promotion has expired.

TERMS AND CONDITIONS The introductory Annual Percentage Rate (APR) Zero Percent (0%) will apply to purchases made during a promotional period of 6 (six) months from the date of opening of your Visa account. After this promotional period ends, 6 (six) months from the date of activation of your Visa account, your standard APR will apply to any remaining balance and to all new purchases and balance transfers. The terms of this introductory rate may not be applied to existing Farmers Insurance Federal Credit Union Visa accounts.

This promotional introductory offer is based on meeting Farmers Insurance Federal Credit Union’s criteria for creditworthiness. Farmers Insurance Federal Credit Union will review your credit and employment history and any other information permitted by law to process your application. The credit line on this account will be determined after a credit review of your application by Farmers Insurance Federal Credit Union and will be based on various factors, including income. FIGFCU maintains the right to not open this account if: a) the information provided is incomplete, inaccurate or cannot be verified, or if you do not meet Farmers Insurance Federal Credit Union’s standards for creditworthiness; b) your name and/or mailing address on the credit application have been altered; c) the income you reported on the application is insufficient to support the opening of this account; or d) you do not meet Farmers Insurance Federal Credit Union’s membership eligibility or “member in good standing” requirements. You have the right to review your credit history by contacting the appropriate credit reporting agencies.

Change in APRs, Fees and Other Terms: Farmers Insurance Federal Credit Union may change the APRs, fees and other terms of your account at any time in accordance with applicable law and the Visa Credit Card Agreement. Factors we may consider in determining whether and how to change your terms include, but are not limited to, a late payment or an extension of credit that exceeds the credit limit, the frequency and severity of defaults and other indications of risk on accounts with Farmers Insurance Federal Credit Union and other creditors. To the extent allowed by law, the change in terms will affect all outstanding balances. If we increase your APRs, the new APRs will apply only to new transactions you make after we notify you of the change in writing unless it is for default in terms as outlined above.  

1APY = Annual Percentage Yield. APY is the annualized rate based on a compounding period of one year. When the deposited money earns dividends and the accumulated dividends starts earning dividends as well, we are talking about compounding. Fees could reduce the earnings on an account. All yields except Certificate yields are subject to change retroactively to the beginning of the month. Rate bonus for $1,000 monthly Direct Deposit into a Farmers Insurance Federal Credit Union Checking Account. No branch or call center access with this account.

2, 3Limited Time Offer Flex-Term Share Certificate available on new Certificates. The following terms are available as follows: 1) 3 months, 6 months, 9 months, and 12 months. This is a promotional yield of 5.00% APY; Annual Percentage Yield (APY) is calculated on a 4.89% base rate;  2) 18 months, 24 months, 36 months, 48 months, and 60 months, this is a promotional yield of 4.50% APY;  Annual Percentage Yield (APY) is calculated on a 4.41% base rate. Yields are subject to change without notice. “Flex-Term” Bonus Dividend may not be combined with any other dividend increase/bonus, i.e., “Direct Deposit Bonus” and “Jumbo Certificate” increased rates. $1,000.00 minimum balance, regular Share Certificate requirement on a 365-day basis compounding monthly or at account closure. IRA Share Certificates with a 12-month term or greater qualify for this promotion. No additional deposits accepted (other than dividends) during certificate term. There is a substantial penalty for early withdrawal of Certificate funds. Fees and other conditions may reduce earnings. The Flex-Term promotional Certificate will automatically roll over to the same term as the Flex-Term period selected at the time of opening at the available rates of Certificates at maturity. Federal regulations require dividends to be paid from available earnings; dividends are contingent upon this regulation. Refer to our TISA Disclosure for terms and conditions. APY = Annual Percentage Yield. Yields are subject to change at any time. Early withdrawal penalty and fees could reduce the earnings on an account.

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