Reducing Credit Card Interest Payment

There are several ways of reducing your credit card interest rates and payments, but consumers must be wary of the hidden costs and charges associated with some low-interest offers.

Are your credit card interest rates too high?

Studies show that most people are not even aware of what the interest rates are on the credit cards they carry in their wallet. A low interest rate, however, can save hundreds of dollars a year for anybody who carries a balance from month to month on their charge card. How can you be sure that you are getting the best interest rate available to you? For most credit card customers, there are a lot of choices available, and competition in the credit card industry means that a savvy consumer can potentially save quite a bit of money.

What are your current interest rates? The rates charged on your cards will be depicted at the bottom of your monthly credit card bill. It is possible that you qualify for a lower interest rate on the credit cards that you carry right now, but you can not assume that the bank will automatically inform you of this. Call the customer service line for your card, and ask the customer service agent if you do qualify for a lower rate. If you have been paying at least the minimum balance due on your bills every month, your credit with the bank should be in good standing, and this is usually rewarded with a lower rate.

What if your bank will not lower your rate, or will not lower it enough? Many credit cards that are soliciting new customers offer low introductory rates on their cards. Most often, they encourage you to transfer the balances from your high rate cards onto their own, and you enjoy a very low interest on the account for a limited time - often six months to a year. After that time period, the interest rate increases to a regular rate. Taking advantage of low introductory rates on a new card can be very helpful if you are trying to pay off a large sum of money over a specific period of time.

There are two things that the customer must be wary of, however, when applying for a new card that has a special offer. First, you will not be reminded that the introductory rate period has ended. Second, there may be a significant additional fee that the bank charges you to transfer your balances from your other credit cards. You must read the promotional materials carefully, including the small print. Even better, you can call the company of the new card you are considering, and ask them about any possible fees. Sometimes transferring your balances with pre-printed checks that they provide for you may incur a fee, but transferring your balances over the phone may not. This is also the case for special limited-time offers that your present credit card companies may send you, where you are granted a lower interest rate on any balances that you transfer from other cards. Always ask about additional fees; sometimes, the amount that you spend to transfer a balance can negate the savings you will incur with the lower rate.

Through being aware of the interest presently carried on your credit cards, making sure that your bank is giving you the best deal that you deserve, and by taking advantage of special low promotional rates, you can insure that you will save money and spend more wisely. Don't forget, credit cards are not just money - they are also a product that you pay for, and you can shop around to get the best price.

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