Do You Need a Lower Interest Rate on Your Credit Cards?
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by: barrywaters
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Are you tired of dragging around huge balances on your credit cards? Do most of your payments go toward your interest, leaving your debt almost untouched? There are several ways to save money on your credit cards, ranging from the quick to the complex.
The most straightforward method is to pay a little extra each month. If your balance is $7,000 and you are paying 14% interest, a $150 monthly payment will cancel your debt in 68 months, and you will pay $10,200 total. That amounts to $3,200 extra in interest payments. However, if you increase your payments by just $25 per month, it will take you 54 months and $9,450 to pay off your credit card balance.
"If I could afford to pay extra, I wouldnt have charged this much in the first place!" you say. Thats reasonable. Most of us arent interested in saving money on our credit cards over time; what we want is lower monthly payments. To lower your monthly credit card payment, the key is getting a lower interest rate. There are a few ways you can accomplish this:
* Roll your debt onto a card with a lower interest rate. Watch out for rollover fees. They can easily reach 3% of your balance, which can amount to a considerable charge. If you can, find an offer that waives rollover fees. The best way to roll over a balance is to find a card that offers a very low interest rate on balances rolled over or charged to the card during an introductory grace period, then maintains the low interest rate for that balance until you have paid it off.
* Call and ask your current credit card company for a lower interest rate. This works best if you have been with the company for at least a year or two, have a good credit history, and have a couple of credit card offers in hand that offer markedly lower interest rates. Tell the customer service representatives that other companies are offering you better deals, and you are considering transferring to them. Frequently, the representative will be able to drop your interest rate, or will be able to offer you other perks. (If the first person you speak to cant help you, thank them politely, hang up, and call back later. Other representatives may have more leeway or may know a loophole in the regulations that the first representative didnt know about.) The worst the company can do is say no. If theyre not willing to lower your rates, switch to another card that offers you better rates up front.
* Ask your credit card company for help. If you are in an extremely difficult financial situation and you intend to pay off your credit card, but you cant make the full payments right now, you may be able to work out an emergency deal with your credit card issuer in which you pay a lower amount per month for a set time. This is solely for use in dire emergency. The credit card company may penalize you by lowering your credit limit or refusing you new credit, and you will have a black mark on your credit rating. However, it is a better and more responsible solution than defaulting, and can squeak you through a tough period.
It will take you a bit of patience, persistence, and effort to save money on your credit cards. However, soon you will have a better deal, and will be on your way to considerable savings and greater peace of mind.
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