Credit cards are notorious for their high interest rates, so it’s generally best to avoid carrying a balance on your cards whenever possible. But whether you’re opening a new card or have an existing one you’re working on, you don’t necessarily have to accept its high rate as reality.
In fact, there are several options available to you to reduce the cost of borrowing by credit card. Here are three possible techniques that could potentially work for you depending on your situation.
1. Ask your lender for a rate reduction
One of the easiest ways to lower the interest rate on your current credit cards is to simply ask your card issuer to work with you. You can make this request by calling the customer service number on your credit card, explaining why you need or want a rate reduction, and asking them what they would be willing to do.
Card issuers often want to keep your business. So if you let them know you’re considering switching to another card company or doing a balance transfer, they may be eager and willing to lower the rate on your current card. Likewise, they also want you to keep paying your bill on time, so if you explain that you are having financial difficulty, lowering the interest rate to help you out may also be a possibility.
Generally, you may be more likely to have luck with this approach if the map has been open for a long time. However, you may need to call more than once before you have someone ready to help you. And, in some cases, the card issuer will only accept a temporary rate reduction – but it can still help you save costs.
2. Refinance your credit card debt
If you are unable to reduce the interest rate on your current credit card debt by asking your card issuer for a break, you have another option worth considering. You can apply for a personal loan and use the loan funds to pay off your card.
Personal loans usually come with a lower interest rate than credit cards, so it may be possible to significantly reduce borrowing costs with this approach. As a bonus, your personal loan should have a pre-determined repayment schedule, so once you refinance, you’ll know exactly when your debt will disappear and how much it will cost you over time.
3. Consider a balance transfer
Finally, another solution to reduce your interest rate could be to transfer the balance of your expensive credit card to another offering a better offer.
Many card issuers want to earn your business and they offer incentives to transfer your current balance from your existing card. This comes in the form of a 0% introductory rate on balance transfers for a limited period of time. For example, you might find many cards offering 0% for 12 or 15 months if you transfer a balance.
Usually, you will have to pay a balance transfer fee to do this. But the fee is often a small percentage of the transferred amount. Since you will then enjoy months of 0% interest, a balance transfer could still pay off.
You should explore each of these three options to decide which is best for your situation so that you can say goodbye to high credit card interest charges for good.
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