Credit card debt is overwhelming for many Americans. Knowing a good interest rate on personal credit cards can assist consumers in managing their debt and planning for a better financial future. The compounding interest of credit cards in addition to having several different cards at once is the main reason for credit card debt becoming such a problem. With adequate knowledge on how to manage credit card interest rates, overall debt can be sufficiently lowered to provide the consumer with a manageable credit card balance and favorable rate terms.
How to effectively lower the interest rate
Negotiate with the Creditor
Sky rocketing interest rates are the primary cause of excessive consumer debt. One of the first steps to take to effectively lower the interest rate on a credit card is to contact the creditor directly. Credit card companies will not want to lose their costumers and simply contacting them to let them know you have received a better offer may be all the incentive they need to offer you a better deal. If possible make sure you are in good standing before contacting your credit card company about a lower interest rate.
If you have a spotty repayment history and are often late, your creditor may not be as willing to work with you on lowering your rate. Also, it is important to have a realistic concept of how much lower your rate can get. Interest rates and fees are the primary way that credit card companies make their profit and they will not be likely to go below a certain threshold. The average interest rate is 12-15%. If your interest rate is much higher, you may have sufficient room for negotiation.
Consider a balance transfer
Another tactic for managing credit card interest rates is to consider a balance transfer. Most new card offers include a 0% interest rate for a certain length of time. Transferring a credit card balance to a card with this type of incentive can save you a significant amount. Most introductory offers last for about six months after which time, a traditional interest rate comes into effect. If your balance is not sizeable, you can direct all your payments towards the principal and pay off the debt in a much shorter amount of time. When choosing a card to transfer your balance to, be aware of the fine print and additional terms and conditions. Also be aware of any recurring monthly or yearly fees.
Tackle the payments on the highest interest rates cards first
It is important to be aware of which credit cards are charging you the highest interest rates. Tackle the payments on these cards first. Making a larger payment towards the cards with the highest rates will help to eliminate compounding debt and pay down the balance much more expediently. It is vital to always pay more than the minimum amount owed on these high interest rate credit cards.
Managing credit card debt does not have to be a difficult undertaking. By staying in contact with your credit card company and requesting a lower interest rate, you may be able to significantly cut down your payments. In addition transferring to a low or no interest rate card will also go a long way towards freeing up capital to pay towards the principal.