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Many credit card users paying through the nose

Credit is cheap these days, unless you're talking about credit cards.

The average credit card interest rate for people with fair credit is a whopping 21 percent, according to financial research firm CardHub. That was almost 4.5 percent higher than a year earlier.

While interest rates for other types of loans, such as mortgages and auto loans, remain near historic lows, consumers haven't seen the same type of benefit when it comes to their credit cards. The reason? For one, credit card debt is unsecured, meaning there's no asset to claim if a borrower can't pay, which raises a lender's risk and pushes up rates.

Meanwhile, a 2009 credit card law aimed at protecting consumers hurt lenders' profits by capping penalty fees. That led card issuers to raise interest rates as a way to recoup the losses, according Bankrate.

While that might not make you feel better if you're on the paying end of those rates, the good news is that people with strong credit histories are paying far less than 21 percent. For those with excellent credit histories, the average rate is just under 13 percent, while people with good credit pay about 17.4 percent. Both of those rates are up from a year earlier, at 0.6 percent and 1.6 percent, respectively.

Credit card debt remains a conversational taboo, with more people saying they're more embarrassed to admit how much they owe on their accounts than reveal their weight, according to a recent poll by the National Foundation for Credit Counseling.

The average household carries $7,087 in credit-card debt, with the country's total credit-card indebtedness mounting to $854.2 billion. That makes it the third-biggest debt market after mortgages and student loans, notes personal finance site NerdWallet.

So what should you do if you're saddled with high credit card rates?

First, call your credit card company and ask for a lower rate. If you pay your bill on time and have a good credit score, remind them of those facts. But before you even make the call, do some research to find out what your lender is offering new customers, as well as what rates are being promoted by competitors.

Second, consider transferring the balance from a high-rate card to one that offers a low or no-interest introductory period. For consumers who are confident they can pay down that balance before the rate goes up, this can be an effective strategy, Bankrate notes.

Third, pay down your balance and commit to paying off new charges every month. With rates only getting higher, carrying a balance means your credit card interest will only increase. Paying off that debt will provide immediate dividends by erasing monthly credit card interest fees, freeing up cash flow in your household, U.S. News & World Report points out.

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