How To Quickly Lower Interest Rates
If interest rates and credit card debt are raining down on you, it’s time to make a change. With a little knowledge and confidence, you can quickly lower interest rates and won’t need to the stress of caring around that umbrella anymore.
What Is an Interest Rate:
Interest is how much someone charges you to borrow their money. With credit cards, if you pay your balance in full every month, there is no interest accrued. If you don’t, you need to pay an additional fee on top of what is owed, known as interest.
Different credit card companies have different interest rates and you need to put in some time to understand what a good credit card interest rate is for you.
What Is APR:
The interest rate on your credit card is expressed as an APR, which stands for Annual Percentage Rate. The rate you are given is based on your credit score, which is a summary of your credit history.
If you pay your credit card bills in full every month, you’ll never have to worry about paying APR.
What Is Credit Card Utilization:
Credit card utilization is the percentage of credit limit you’re using every month. If your balances are paid in full every month, you won’t accrue any interest charges and your credit utilization rate will be low. It’s recommended keeping your utilization score under 30%.
How Does It All Work:
Every month, your credit card company decides what an acceptable minimum payment is to remain in good standing with them. Keep in mind his minimum payment comes with a penalty, which is the interest you are being charged in addition to what you’ve spent on that card. While it won’t affect your credit score, minimum payments will extend your debt and cost you more in the long run.
If you decide not to pay your bill at all, it will impact your credit score and you’ll accrue late fees. Skipping a bill is never a good option.
Evaluate Your Current Situation:
When you sit down and review all your credit card statements, it can be overwhelming. Luckily, there are methods to quickly lowering your interest rates.
- Educating yourself and doing some research should be your first step to financial freedom
- Looking at your card statements to find out what percentage of interest you’re currently paying is important knowledge
- Researching to see what competitors are offering will be a great tool for you
The knowledge you’ve gained from investigating your situation will come in very handy while negotiating with your credit card company. It’s very possible to lower your rates with a simple conversation, but you need to come prepared.
Switch Your Method of Payment:
If you’re discovering you’re spending more than you can afford, especially month after month, swapping out your credit card for a debit card is a smart move. This means the money you spend comes right out of your checking account instead of you having to borrow it.
Cash is also a good option since you can’t purchase an item that costs $100 if you only have $75 in your pocket.
When figuring out how to lower interest rates, changing up your method of payment is an easy solution.
Build Your Credit:
Having good credit unlocks many doors, so if yours is not very impressive, it’s time to repair your bad credit. Organically, this takes time, however, if there are any mistakes on your report, you can partner with a professional to quickly remove them.
A good tip is to either start paying off your smaller balances or to try and make one large payment on a higher debt. Obviously paying your bills on time is a very simple way to improve your credit score.
Remember, the best interest rates are reserved for those with good credit, so use that as a motivator.
Reach out to Credit Card Companies:
Once you feel you’ve done your homework and tried to raise your credit score on your own, it’s time to ask for a lower interest rate.
- Ensure to have everything you need in front of you to make your case, as everything needs to be based on fact
- If you hear, “No”, ask to speak to a manager and don’t get discouraged right away
- Bring a good attitude with you as it will go a long way
- Mention deals from competitors as they may not want to lose your business
After you’ve exhausted all your options with your current credit card company, and they’re unwilling to lower your rates, it could be time to move on.
Here’s a great site to help you find the best credit cards based on your specific needs. There are a ton out there and many have no balance transfer offers.
Taking these steps will lower your interest rates and open up many doors. It will feel great knowing you worked hard to create better financial health for yourself.
