Figure Out Your Credit Score
Some of the first things your credit card company will look at are your payment history and credit score. You can order a free annual credit report to ensure it’s accurate and to see your payment history and debt-to-income ratio . Reviewing the report — checking for late payments or other blemishes — will give you a sense of how assertive you can be when asking for a lower rate.
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Situation : You Have A High Interest Credit Card And Sometimes Pay The Balance Off On Time And In Full
You may not always be able to pay off your balance on time or in full, especially during a time like the coronavirus pandemic. But there are some steps you can take to avoid racking up debt on your high-interest credit card without having to close it.
First, call your credit card issuer and see how they can help you.
“If you don’t pay off your full balance each month and have a high interest rate on your card, it may first make sense to try to negotiate with the card issuer for a lower interest rate,” Ma says.
Certainly now, credit card issuers are more flexible when it comes to offering relief to their cardholders. They also may be willing to downgrade your current card to a lower interest card or one with no interest at all. This way, you don’t have to technically “close” your high-interest card, which can lower your overall and increase your . A decrease in your credit utilization rate will bring down your .
Who Is Take Charge America
Since 1987, weve helped more than 1.6 million people take charge of their finances and pay off their credit card debt. We have long-standing relationships with hundreds of creditors, which allow us to achieve lower interest rates for our clients. As a nonprofit agency with an emphasis on financial education, our goal is to help you become debt-free and stay that way.
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Ways To Reduce Credit Card Interest
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Credit card debt takes a toll. Beyond the stress of having it hanging over you, the interest can cost hundreds or thousands of dollars per year. According to a NerdWallet study, the average U.S. household with revolving credit card debt balances carried from one month to the next will pay $1,155 in interest charges this year.
The only way to eliminate credit card interest entirely is to pay your balance in full every month. But there are also ways to reduce your interest costs significantly as you pay down debt.
Consolidate Your Debt Onto A Balance Transfer Credit Card
One of the best ways to access lower interest rates is by signing up for a balance transfer credit card and consolidating your debt. The idea of getting a new credit card may sound like a weird solution but hear me out.
The best balance transfer credit cards come with rock-bottom promotional interest rates for a limited time . By moving your debt on your current credit card to a balance transfer card, youll have access to these ultra-low rates and can pay down your debt considerably faster.
Think of it like youre using one credit card to pay off another.
Heres a simplified example of what would happen if you kept a $3,000 debt on a typical credit card versus if you moved it over to a balance transfer card with a 0% offer for ten months, while making payments of $300 each month:
|Balance transfer card|
Some additional things to know about balance transfers: youll usually need to pay a flat transfer fee upfront and you can only transfer balances between credit cards from different banks.
How To Reduce Credit Card Interest
High interest rates mean higher monthly payments for those with . Fortunately, there are ways to lower your credit card interest rates, including negotiating with the credit card company or consolidating your debt. Consolidation can take on several forms, ranging from a debt management program, to a personal loan to putting everything on one card with a lower interest rate.
Most high credit card interest rates are tied to a low credit score. Before you work on lowering your interest rate, its important to do your homework, including knowing what your credit score is.
The average APR for new credit cards was 19.24% at the end of 2019, but, as youll see, the average rate fluctuates depending on the credit score. The higher your score, the lower your interest rate.
Heres how it breaks down:
- Fair Credit 22.57%
- Good Credit 20.31%
- Excellent Credit 14.41%
A low score may make it harder to convince your credit card company to cut a deal. .
There are things you can do to improve your credit score, but that might not be enough and is not a quick solution.
Everyones situation is different. Take a look at how to negotiate a lower rate, and if that doesnt work for you, there are other options listed below that for reducing your credit card interest rate, so you can pay off your credit card debt faster.
How To Get A Low Interest Credit Card
There are four ways in which an applicant can apply for a credit card:
Each process has its own benefits but doesnt vary much while applying for a credit card. Let us help you understand this by giving examples:
John received an email from American Express where they were offering the Platinum Card with a higher membership rewards welcome bonus.
His friend Melinda applied online and received 100,000 Membership Rewards points, but there were conditions.She has to spend $6,000 on purchases on the card in the first 6 months, and there is an annual cost of $695 too. This might vary from the credit card company to company.
If Melinda had done her research properly, she might have found a better deal on the best credit cards with low interest rates or even 0% APR available online.
In some cases, customers got way better deals through banks than they had gotten online or via email. This might happen because of their previous relationship and better dealing with the bank representatives, which made the case stronger. This can help a lot for consumers with bad credit or little credit score history.
Thats why we always suggest doing research properly, looking for the best credit cards for low interest rates, talking to their representatives, and making your decision.
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Cons Of Balance Transfer Credit Cards
- Balance transfer fees: Most cards charge a balance transfer fee generally from 3% to 5% that could increase your balance.
- Higher interest rates: Credit cards generally have higher interest rates than personal loans. While you might be able to take advantage of a 0% APR introductory offer depending on the card carrying a balance beyond this period could lead to steep interest charges if you dont pay off the card by your due date each month.
- Might be tempting to rack up a balance: A balance transfer card is still a credit card. Even if you pay your initial balance off, it could be tempting to rack up a balance again.
Understand How Apr Works
Before trying to lower your APR, it helps to know how credit card interest works. When it comes to credit cards, the Consumer Financial Protection Bureau says interest rates are typically expressed as a yearly rate. Thatâs the APR. And itâs the price you pay to borrow money.
Itâs also important to know that the way you use your card can affect your APR. For example, there may be different rates for standard purchases and cash advances. The rates for 0% APR cards are usually temporary. And missing payments could lead to penalty APRs, which may be higher than the standard APR.
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Here Are The Discover Card Interest Rates:
- Discover it® Cash Back: 11.99% – 22.99% Variable regular APR. Intro APRs of 0% for 14 months on purchases and 0% for 14 months on balance transfers. 3% intro balance transfer fee, up to 5% fee on future balance transfers *.
- Discover it® chrome: 11.99% – 22.99% Variable regular APR. Intro APRs of 0% for 14 months on purchases and 0% for 14 months on balance transfers. 3% intro balance transfer fee, up to 5% fee on future balance transfers *.
- Discover it® Miles: 11.99% – 22.99% Variable regular APR. Intro APRs of 0% for 14 months on purchases and 10.99% for 14 months on balance transfers. 3% intro balance transfer fee, up to 5% fee on future balance transfers *.
- Discover it® Student Cash Back: 12.99% – 21.99% Variable regular APR. Intro APRs of 0% for 6 months on purchases and 10.99% for 6 months on balance transfers. 3% intro balance transfer fee, up to 5% fee on future balance transfers *.
- Discover it® Student chrome: 12.99% – 21.99% Variable regular APR. Intro APRs of 0% for 6 months on purchases and 10.99% for 6 months on balance transfers. 3% intro balance transfer fee, up to 5% fee on future balance transfers *.
Reduce Interest Costs On Your Credit Card
Used properly, your credit card provides fast and easy access to funds without the need to carry a large amount of cash. Understanding how interest costs are generated will help you make educated decisions about the responsible use of your credit card.
How to minimize interest charges
Here are some tips to help minimize the interest charges on your credit card:
- Pay off your credit card balance in full each month.
- If you choose not to pay off your balance in full, try to pay more than the minimum balance due.
- If you carry a balance from month to month, consider a RBC Royal Bank credit card with a lower interest rate.
- Understand the interest charges and fees being applied to your credit card account. For example, remember that with cash advances, interest begins to accrue as soon as the cash is advanced.
- Remember that the faster you pay off your outstanding balance, the less interest you’ll pay.
- Consolidate your debt from higher interest cards-like department store cards-to a lower interest RBC Royal Bank credit card.
- Make payments on time. Take advantage of helpful tools like automated payment options.
- Be a careful consumer and know the cost of using credit cards. Be sure to read the important information in the Cardholder Agreement mailed to you when you receive your RBC Royal Bank credit card.
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Avoid Putting Medical Expenses On A Credit Card
According to our study, up to 27 million Americans could be putting medical expenses on credit cards. While unexpected or even expected medical bills might not fit into your budget, putting them on a credit card is rarely the answer. Depending on the amount you owe, doing so could cost you hundreds of dollars in interest and you may be able to pay the balance off while avoiding interest altogether. Doctors and hospitals will often help you set up an interest-free payment plan with reasonable monthly payments. Call your doctor or hospitals billing department and ask about your options.
Ask About Your Lenders Financial Hardship Policy
You dont necessarily need a good credit score to convince your lender to give you a break. Your credit card issuer may be willing to lower your interest rate or work out some kind of alternative repayment plan if you can demonstrate that you are genuinely going through financial hardship.
Check with your lender to see what kind of policies it offers and write down why specifically you are having trouble paying your debt. Lenders dont want you to default on your loan and so they may be more willing than you think to work out a plan.
You may also want to consider enlisting the help of a nonprofit who can help you go over your financial situation and give you some advice for requesting a lower rate.
You can contact a certified credit counselor at:
If youre really having a hard time paying your bills and decide to enter a formal debt management plan, a credit counselor will even negotiate with lenders for you. However, unlike basic credit counseling, this service generally requires a fee.
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Whats The Average Credit Card Interest Rate
According to recent data, the average credit card interest rate is roughly 20 percent.2 If you have a good or great credit score, you may be able to find low-interest cards at around 14 percent, or those with a 0 percent introductory rate, which help you save money. Keep in mind that balance transfer cards usually have lower interest during the introductory period, and a standard interest rate applies thereafter.
Debt Consolidation Loans Beat Credit Card Rates
Personal loans, also known as debt consolidation loans, are another strategy to lower your credit card interest rate. Banks offer lower rates on personal loans than on credit cards, but again, this will depend on your credit score.
If you can qualify for a loan, you can use the money to pay off your credit card balances. That leaves with you just the debt consolidation loan to pay off.
Take Out A Personal Loan
Another option is taking out a personal loan to pay off your credit card debt a process known as debt consolidation. Personal loans often have lower credit card interest rates than credit cards, which means you could save money on interest charges while repaying your debt.
If youre struggling to get approved, consider applying with a cosigner. Not all lenders allow cosigners on personal loans, but some do. Even if you dont need a cosigner to qualify, having one could get you a lower interest rate than youd get on your own.
If you decide to take out a personal loan, its important to think about how much that loan will cost you. This way, you can be prepared for any added expenses. You can estimate how much youll pay for a loan using our personal loan calculator below.
Enter your loan information to calculate how much you could pay
Checking rates wont affect your credit score.
Balance Transfers Offer Low Introductory Rates
Transferring your credit card balance to another card is an option for those with solid credit scores. Many balance transfer cards come with a 0% introductory rate for 6-12 months, which can be a great tool to eliminate debt.
But there is a catch
That low rate is a ticking time bomb. Once the honeymoon phase is over, credit card companies will often slap you with rates well above average. There is also usually a transfer fee of 3% to 5%, meaning you would pay as much as $500 to put $10,000 in old debt onto a new card.
You will have to have a good-to-very-good credit score to qualify for one of these cards. Those without solid credit should look to debt management programs for relief.
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How To Lower Your Credit Card Interest Rate In 5 Easy Steps
Here are some ways to accelerate debt payoff and score a lower credit card interest rate.
can be crippling to your financial wellness, and once youve racked up a large balance, it may feel like theres no way out. If youve ever felt this way, youre not alone.
On average, Americans with carry $6,194 in debt, according to a report by Experian. Some areas, especially southern states, carry a higher average debt burden than others. With average interest rates hovering around 17%, low minimum payments and no set repayment timeline, such a balance could take decades to pay off.
1. Call your credit card company
While you may not be able to get a permanent reduction in your credit card interest rate this way, you may be able to negotiate for a lower rate temporarilywhich can come in handy if youre just looking to pay off some holiday debt.
Start by politely explaining your reasoning for asking for a lower interest rate. If youve always made your payments on time, point out your history of being a good customer. It can also help if your income has increased or your credit score has improved since you first opened the account.
4. Improve your credit
Ask To Have The Card Interest Rate Lowered
Once you are connected with a representative, this is the time to begin negotiating your rate. You may want to mention your good payment history, your loyalty to the company, or a high , if you have one.
You should be polite when asking for an interest rate change. If you yell or become belligerent, then the customer service representative will not be as willing to help you. Politeness goes a long way in situations like these, though it is important to be persistent.
Keep in mind that you may run into difficulties getting a reduced rate if you have a history of late payments, a low credit score, or a lot of outstanding debt.
Your credit card company wants to continue to make money off of your account, so generally, it will not bring your interest rate down to zero. However, it probably also wants to prevent you from defaulting, so it may decrease your interest rate if you make a good case.
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