Credit cards can be a tricky venture. Many individuals that use them find themselves in more debt than they can handle. With credit cards, it’s very easy to rack up a ton of charges as you have access to a large sum of money. Credit cards allow for streamlined access to money as opposed to having to wait while applying to take out a loan.
It’s a good rule of thumb to pay off your entire balance at the end of each month. This will ensure that you don’t get charged interest on the amount that you borrowed, as credit card interest rates are extremely high. If you have found yourself with a balance that you just can’t afford to pay off by your payment date, you can try some of these tactics below to get a lower interest rate on the amount.
Transfer To A Zero Percent APR Credit Card
While opening a new credit card may not always be the most financially strategic action to take, in this case, it could save you a ton of money. Many credit card providers will offer new members a zero percent introductory rate to get their business. This is great news for you as you’re able to pay off the credit card balance without dealing with any interest charges.
You should pay close attention to the introductory period. Some credit cards offer three, six, or even one-year introductory periods. The whole idea is to have the amount on the card paid off before the interest rate increases. You should ensure that you’re able to do this. Realize that the interest rate may increase to a level even higher than what your current cards are charging.
Not all transfers are free to do. There are many people who have taken advantage of these zero percentage interest rates to save money. However, credit card companies have discovered this and have instituted transfer fees. It’s likely that even though there is not interest on the card for a set time, you are still going to be charged a three to ten percent transfer fee on the total amount of money that you’re transferring.
Things To Avoid
Zero percent cards have two major catches that all individuals should know about before applying for them. First, if you don’t pay your monthly payment on time or you go over your balance required, it could void the introductory deal. This means the card will start to accrue interest after the missed payment or overbalance.
Second, many providers will keep a tab on the interest you would’ve been charged had you not been on the introductory rate. Once the introductory period is over, they not only increase your rate but they tack on these accumulated charges since the balance wasn’t paid back in full before the end of the introductory period.
Talk To Your Credit Card Company
If you have a good record with paying your bills on time and have been a long time client, it can’t hurt just to ask the company to decrease your rate. The company knows that you are spending money, because you have a balance owed, so they are more likely to work with you on decreasing the interest rate to retain you as a customer.
One way that some creditors may help you is by finding another card with the company that offers a zero percent annual percentage rate. You can speak to someone on the phone about applying and they can approve you right then and there. While this option is similar to the above, you can get all your questions about balance transfer, after introductory rates, and more answered by the representative on the phone. This will save you a lot of reading.
Boost your Credit Score
Your credit score is a reflection of how well you are at finances. If you have a high credit score, a potential lender knows that you are extremely likely to pay your bills on time and will not take out more credit than your finances can handle. If you have a low credit score, companies know that you are less likely to pay your bills on time and you will probably take out more money than you can comfortably pay back.
By taking the time to look at your individual credit score, you can identify key areas of where you can improve. The goal is to have the highest credit score you possibly can. When you have a high credit score, you receive access to more credit offers with much lower interest rates than those who have lower scores. You will have to work to get good credit. This means you’ll have to pick up good financial habits along the way.
Even if you have a credit score in the low 300s, you can improve it with time and commitment. A quick online search will help you discover the major factors in your credit score so that you can skew them in the right direction. These factors include your credit utilization, types of credit accounts, credit length, payment history, and the number of credit inquiries.
Every different credit reporting bureau uses their own percentage of each of these components to come up with a credit score. The biggest bureaus include Transunion, Equifax, and Experian. While you may not know the exact percentages, it is widely accepted that the two most important factors for your credit score are your payment history and credit utilization. Start working towards making these look better as they’re going to bring you the most improvement in your credit score.