5 Handy Tricks for Getting a Better Credit Card APR
Getting a lower APR on credit cards, or an annual percentage rate can save you a lot of money in the long run. It also can help you keep your head up as you’re paying your way through debt.
In the following article, we’ll be discussing how APR works as well as the specific ways a lower rate can turn around a bad situation. Finally, we’ll be addressing five major steps you can take to get the lowest rate possible. Let’s begin!
How Your Annual Percentage Rate Works
The simple definition of an APR is the yearly amount of interest and fees you will pay on loan and credit card balances.
An APR of 24 percent, which is pretty common for an industry whose average is 14-15 percent, would add another $240 per year to an outstanding balance of $1,000.
What you actually pay, however, can get more complicated as your balance fluctuates. To know the total amount of APR you’re paying for the month, track the ending balance at the end of the billing period, and add two percent interest (in the 24 percent example).
If your outstanding balance was consistently $1,000, you would need to pay $20 a month just to keep the total from going up. In those terms, it’s easier to see why a low APR matters.
Why You Need a Lower Rate
A lower rate has a number of advantages to your financial well-being. In this section, we’ll be hitting the three most common. Without further ado, lower rates are vital because:
You Are Throwing Money Away
That $20 per month that we’re talking about above offers no help in actually getting you out of debt. It just keeps the debt you have in place. That’s money you can’t use towards retirement, dream vacations, or family essentials.
High APRs Can Keep You in Debt
High APRs also can keep you in debt for longer periods of time and actually grow the amount of debt you’re in without you having to spend or charge a single extra dime. If you ever want to break the debt cycle, you’ve got to start cutting into the principal amounts.
Unforeseen Expenses
No one can escape the eventuality of an unforeseen expense.
Unfortunately, most families and individuals do not have the spare cash to handle medical emergencies or even basic housing maintenance, largely due to the heavy amount of debts they owe. A low APR gives them a better chance of getting their heads above water.
Now that you know the importance of a low APR, it’s time we get down to the business of how to lower your credit card APR immediately. The following five tips belong in your negotiating toolkit.
1. Exploit Introductory Offers
It is true that an introductory credit card offers crowding up your mailbox or inbox can get a bit taxing. However, there’s gold to be mined from these offers.
You often can get a low APR, or even a zero percent introductory offer with a balance transfer, over an extended period of time. Fifteen to 18 months is not uncommon for good credit scores.
Making your payments on time every month will ensure those outstanding balances go down drastically during the time of the offer. That’s what makes this particular method one of the best tools you have at your disposal as a consumer. Use it wisely.
2. Seek a Card Known for Low Interest
The downside of an introductory offer is that things can get expensive should you miss a payment, and forgetful billpayers could soon find themselves losing out if they fail to pay attention to the fine print.
An alternative for how to lower the interest rate on your credit cards is to simply seek a card with a lower ongoing rate.
You will find no shortage of offers through both traditional banks and online lenders. Explore several options before deciding on one, though, because applying for credit will result in what is called a “hard pull” that may negatively affect your score.
3. Talk Directly to Your Existing Card Issuer
A third tip for how to get a lower interest rate is to appeal to your current card issuer’s sensibilities for their customers. Speak to a customer service representative. Explain how loyal you’ve been.
Then, subtly, you can mention some of the better offers or opportunities that are being sent your way. Tell them you’d just as soon stay with them, but they’re going to have to do better.
Companies that value their customers enough will work hard to keep them. This can result in an almost immediate reduction in your APR.
4. Make Payments on Time and Eliminate Debt
So far, our methods have included dealing directly with banks, online lenders, and offers. While they can be necessary components to your search, one of the most useful things you can do for yourself is to start shaping up your credit score.
Lenders feel better about offering lower rates for lower credit risks. Show them that you are one by making all your payments on time. It doesn’t matter if it’s for a credit card, house payment, or utility bill.
Show them you pay what you owe when you owe it, and you’ll be rewarded with a better credit card offer. Those rising scores also will enable you to apply for more traditional loans on larger purchases, such as a home or car.
5. Keep Trying
Say you’ve tried everything above, and you’re just not in a place where you can get the APR you want yet. That’s okay. Debt and bad credit can take some time to get out of.
Starting today, however, you can begin climbing your way back up the scale. Keep your eyes open for offers. Keep calling representatives.
It may take a few months or a few years. However long, persistence is key.
Obtaining Lower APR on Credit Cards Can Save Thousands
We hope this look at how to lower APR on credit cards has been an enlightening one that will give you workable ideas to save money and get on a better standing with your credit score.
Good luck, and to get started taking back your credit score, click here.
