Are you paying back minimum balances on your credit card every month only to find the balance not reducing significantly due to high interest rates? Here are some tips.
Most people who have been using credit cards for expenses that are beyond their means of income find themselves credit card asking at some point, “How can I lower my credit card interest?” If the card has a high interest rate, then even if you pay the minimum amount every month, the huge interest on the outstanding balance makes your debt grow at a faster rate. Here are some FAQs that will help you learn a few ways to reduce your credit card interest rate.
How can I lower my card interest with a good credit rating?
A credit card is just another form of loan that a bank or a company extends you. As with a loan, if you are a good customer, use your card regularly, and pay back your debts on time, then your credit rating increases. If you have a good credit rating and call up the company to request a lower rate, they will probably be happy to do it rather than lose your business. Of course, it depends on the existing rate. If you already have a rate that is close to 8% then it is unlikely that the bank will lower it any further. You stand a better chance with rates that are 15% or higher.
How can I lower my card interest by negotiating with the card company?
Compare the interest rates on other cards offered by your company as well as those offered by other banks. If you find a card with a significantly lower interest rate, you can call up your bank and try to negotiate and get the same rate.
How can I lower my card interest through a balance transfer?
If the company is not willing to reduce your interest rate, explore the option of transferring the balance to a 0% interest card without annual or joining fees. However, do this only if you are confident of clearing all the balances by the time the term of the card expires as the renewal rates could shoot up as high as 30%. So make sure you read the fine print!
How can I lower my credit card interest by using other sources of debt?
Another option is to look at the various unsecured loans that you could take at a lower rate of interest than your credit card. Use the loan to pay back the outstanding balance on your credit card. Make sure that you pay back the loan as scheduled otherwise your credit rating could take a beating and reduce your chance of getting further loans. Be smart, analyze all your options, and choose the method that is most financially viable and beneficial to you.