Paying Off Credit Card Debt: Strategies to Lower Credit Card Interest Rates
A credit card enables us to make purchases instantly, instead of taking a few days to gather the cash for the purchase. Credit cards are a billion dollar industry and each company wants our business. Today, there is good competition between credit cards which allows the consumer more choices to pick a credit card for their lifestyle. Learning a little about the credit card companies and their tactics allows the consumer to make an educational choice on which cards to carry.
Credit cards carry an interest rate if the amount is not paid in full at the end of the month. Each credit card has their own interest rate, with department stores on average having one of the highest rates. Credit card companies encourage us to spend beyond our means to collect on the interest rate. For example, carrying a balance of $1000 dollars for a year at an interest rate of 17% will cost the consumer an additional $170 a year. This may seem small but many of us are in debt for larger amounts. A $5000 balance for a year will cost the consumer $850 dollars.
Debt is not fun but many of us have a difficult time living in today’s world without accruing debt. Save a few dollars but being lowing your credit card interest rate.
Ask to Lower Your Interest Rate
Be brave, the worst thing that can happen is they say no. However, with the high competition they may be more likely to say yes.
When you call your credit card provider tell them you are thinking of cancelling your card because another provider has offered you a lower interest rate. There are many credit card companies offering lower rates to win your business. As well, have the credit card information ready to inform the credit card representative. Many times if the representative is unable to provide you with a lower rate they will transfer you to management to try and keep you as a loyal customer.
In addition, if the representative says no, call back, as you will usually not be transferred to the same customer representative. It is important to stay calm on the phone and to tell them how important it is for you to receive a reduction in the interest rate.
Shop Around for Your Credit Card
American and Canadian credit cards are all fighting for your business; be a wise shopper. It is important to look at the rewards, interest rate, and yearly fee. Some companies may have slightly higher interest rates with exceptional rewards. The great rewards will counteract the slightly higher interest rate. The PC credit card allows you to earn points toward your groceries; an excellent initiative. For some individuals, they may prefer the rewards shopping experience. The consumer is able to use their rewards to purchase electronics or beauty supplies.
Know Your Credit Limits
Credit card companies do not fret if you get into astronomical debt as long as they are receiving their monthly payments of interest. Most if not all of the minimum payment is paying the monthly interest. It is important to budget and not to go over your set out budget because you have room on your credit cards.
Move Your Debt Around
If you gather a debt of $5000 it does not mean you have to keep your debt on that card. Place your debt on a card that allows you to transfer debt for a reduced rate for 6 months to a year. The reduced rate will save you a few pennies. Before you transfer any balance beware of the company’s fine print. President Choice allows you to transfer your balance at 2.9% for six months, however, if you miss a payment or are late with a payment for 2 months your interest rate will be at their regular rate which is about 20% if not slightly higher. Transferring balances is a good idea, but, you must always read the small print.
Paying down your credit cards can be an overwhelming experience. It is best to pay the most money to the company charging you the most interest rate. As well, shop around to ensure your credit card is working for you not against you.