Many of us are sucked in by what started out as a 0% interest rate on a credit card. After the initial period we find ourselves sinking in interest payments. It’s nice when the “introductory” rate starts out and we don’t even mind making a few purchases beyond what we really “need.” Then the rate expires and we have gotten ourselves into a position where our card debt is out of control and we are paying a huge rate from 10 to 20, 30% or even higher. The interest rates on credit cards can suck the life out of your budget and bank account. Fortunately, as consumers we have some options for lowering our interest rates and finding ourselves out of the financial debt cycle. Here are 5 ways to reduce the interest rates on your credit cards right now.
1 – As Simple as Asking
In many cases getting a lower interest rate on a credit card can be as simple as asking. If you are a cardholder and in good standing with the company, you can request a lower interest rate. Simply ask them to re-evaluate the account. If you are in the process of rebuilding your credit and you are sure your score is getting better, this can be a very good option. When negotiating remember to stay calm when you ask to speak to a manager. State your case very clearly and calmly. You may be surprised at such a positive response.
2 – Transfer the Balance
If negotiating your credit card rates does not help secure lower rates you might want to try a different approach. You can shop around for the best deal for balance transfers. You can save a bundle of money by transferring a credit card balance to a card with a lower interest rate. However, you want to do your homework on this one as there can be extras that chip away at the savings. Make sure there are no extra fees such as an annual fee or balance transfer fee. These can really cut into what you’d be saving. Make sure to read all of the fine print!
3 – Credit Score Based Rates
This might require some research, but it can certainly be worth the time spent. It’s good practice to know what your current credit score is and there are several ways to get it for free. Once you know what your score is look at what your credit card company is charging you in interest. If you have a high credit score, you should not be charged the “prime” or regular rates. Higher credit scores should be getting the better rates. The company is not going to change their rates on their own. You will need to bring it to their attention if you discover you have a prime credit score. For sure there are many paid credit report companies that have some benefits and if you have money you can try them, but if you don’t have money now, you can get absolutely free credit report, no credit card required from Credit Sesame.
4 – Make Electronic Payments
Of course we all know that it’s best to pay off your credit card’s full balance each month. This saves you from having to pay interest at all. But if you get yourself in a bind, like we all do from time to time, then pay often and pay electronically. Every day counts since interest is calculated on daily balances. By paying electronically, you get the payment to them much faster than mailing a check. This can ultimately translate into saving dollars on interest.
5 – Pay as Often as You Can
In one way it can seem like it’s best to save your money until you can make a large payment on your credit card bill. Actually, it’s not the best option. Even if you have just part of what you are planning on paying this month it is better to go ahead and pay it now. This might mean making multiple payments throughout the month but it’s okay. Each payment helps whittle down your balance and you want a lower balance each time interest is calculated. Ideally, you could make a payment after each of your checks instead of making just one larger payment on the due date.