Are you paying a lot of credit card interest? Do you even know how much interest you are paying each month or year? Some credit card users receive quite a shock when they finally see those totals. Consumers spend over $1,000/year on just interest each year.
So what can you do about this? Can you reduce the interest on your credit cards? Yes, you can.
3 Ways to Reduce Credit Card Interest
1. Pay off your balance in full each month.
By paying your entire balance each month, you avoid interest entirely. This is easier said than done. If your goal is to pay zero interest, you will need to make a plan that includes budgeting all credit card purchases. Even if many find it difficult, this is achievable.
2. Ask your Credit Card Company for a rate reduction.
Is this even a thing that credit card companies are willing to do? Of course, it is.
Credit card companies like to let consumers think that some higher power decides interest rates. They want you to believe there is nothing anyone can do to change your number. Not questioning your interest rate always works out in their favor because it means your likely to pay more money directly to them.
Your credit card company’s primary focus is to keep you as a customer and paying interest as long as possible. If they think you might leave because of a higher interest rate, they can be surprisingly willing to discuss reducing it.
How to ask:
- First, consider what your goal is. Just trying to save money? Have a unique situation that’s making you do this? Different goals might require you to take different approaches.
- Next, gather some potential offers or options. Can you get approved for a 0% balance transfer? Is there any other way that taking your business to someone else might help achieve your goal?
- Finally, call customer service. Let them know about your options. Tell them why you are considering making changes. Say you would rather not go, but that they need to give you a reason to stay.
3. Transfer your balance to another card.
A surprising number of credit cards offer 0% APR as an introductory offer for new customers. Transferring all (or some) of your balance to one of these accounts could give you just the time you need to pay down that balance with no interest adding to it. Just be fully aware that you will end up right back where you started if you fail to pay down the balance.
Of course, you can be stuck with your current interest payments. Occasionally the circumstances just don’t make that rate reduction possible. Those occasions are much rarer than most people realize, and even when they do occur, it is only temporary. By simply being aware of the options you have as a consumer, you can control how much it costs you to use credit cards.