5 Ways to Decrease Interest Rates on Credit Cards
The Minimum Payment Interest rates associated with credit cards can drain your income. For example, if you were to purchase a meal for $20, after you have eaten the meal, you could end up paying up to $15 additionally, when you don’t pay off the outstanding balance on your credit card. Even though, your intentions are honorable to pay your incurred debts, you could still fall behind on credit card payments, resulting in making only the minimum payments each month. If you do this, it could take you years to pay for a combo meal. With higher than normal interest rates, consumers can only afford to pay the minimum amount, which can turn into a vicious financial cycle. Luckily, there are ways to decrease interest rates on your credit cards to prevent or avoid a debt spiral.
Negotiating Many consumers are not aware that they have the potential and chance to negotiate with the credit card company for a lower interest rate. This is the best option for a lower rate instead of getting a new credit card with a 0% introductory interest rate. When you get a new credit card, it triggers an inquiry on your credit report and lowers your credit score, subsequently leading to even higher rates of interest. Again, this is a vicious financial cycle to avoid since there is no way to avoid your credit card balances.
Transfer Balance There are some cases in which, consumers cannot negotiate for a lower rate of interest, especially if your payment history is undesirable or the credit card company isn’t interested in playing ball with you. If negotiation fails, you could think of transferring credit card balances. This allows you to shift certain debts to a lower interest rate card. Do your research to find the ideal transfer deals to choose from.
Make Changes You could try to find another kind of debt. For example, instead of a credit card, get a personal loan from your credit union locally. You could consider a home equity loan, but only if you are out of options. It is not a good idea to go from unsecured debt (credit card) to secured debt (line of credit or home equity loan).
Restructuring Your Debt Most creditors understand that life comes with its twists and turns. So your financial distress is not news. From unemployment to an illness, your finance is at a disadvantage and a credit card interest rate could be your saving grace. Restructuring your debt to include a lower interest rate is an option that some credit card companies will consider. You could ask your creditor to suspend annual fees or over the limit penalties.
Conclusion For many individuals, owning a credit card comes with its own headaches. You can reduce your debt by getting a decrease on the interest rate associated with your credit card. Don’t be afraid to negotiate with the creditor and neither should you refrain from considering all other options.