Once you own a credit card it is your duty
to use it responsibly. If you are smart enough to handle your finances you can
take a full advantage of the perks and rewards the credit card company offers while
building a good credit standing without paying much in interest. However, if
you don’t know how to use your credit card responsibly you are more likely to
end up buried in the mountain of debts.
If you are paying high interest on your
credit card, here are 5 smart ways on how to reduce your credit card interest
rate:
1.
Use balance transfer credit cards to get a low-interest rate
If you have a good credit score, pays on
time and never went over the credit limit balance transfer is the best option for
you. In using balance transfer, you have to make sure that you have done a
thorough research and studied all possible options. Look and compare introductory interest rates
that the credit card offers. It is quite common to have a 0% introductory
interest rate for balance transfer and it usually lasts from 6 to 12 months.
See to it that you got a 0% introductory APR as well.
However, you have watch out for the
transfer fee. Transfer fee usually ranges from 3% to 5%. Take a closer look at
the standard interest rate. The standard interest rate is the interest rate you
have to pay when the introductory period lapses.
Make sure you pay attention to the standard
interest rate on the account. Always remember, although a 0% introductory
interest rate looks great, it doesn't last forever! The standard interest rate
will be the interest rate you pay once the introductory period expires. Make sure that the standard interest rate of
the new credit card is lesser than your old one, or else you will be paying
more rather than saving more.
2.
Negotiate for Lower Interest Rate
If you have a good credit standing,
negotiating for the lower interest rate is also a good option. Call the
customer service of the issuing bank. You can usually find the contact number
of the bank on the statement of account or in the back your credit card. If you
have been a long-time card holder and have a good credit score are likely to
have the chance to get lower interest rate.
When negotiating for lower interest rate,
always mention that you have received low-interest credit card offers from
competing banks. Most of credit card companies don’t want to lose their good
paying clients and will likely match the offer of the competing banks.
Negotiating for the lower interest rate is a viable credit card debt reduction strategy.
3.
Apply for Credit Card Financial Hardship Program
If you tried the options mentioned above
and was declined, you may try to apply for a credit card financial hardship
program. Most of the banks and credit card companies have financial hardship
team that is trained to handle financial analysis and creates viable debt reduction plan for their clients.
Depending on the severity of your financial situation, the company may be
willing reduce your interest rate.
4.
Debt Consolidation
If your financial situation is dire, and
there is no way you can afford a minimum payment of your credit card debt you
may want to consider debt consolidation. It is a form of debt refinancing where
you take out one loan to pay all your other loans consolidating your loan in
one just one lender. If you choose a right company to consolidate your debt, it
could greatly help you in righting your financial situation.
5.
Debt Settlement
If none of the other four options mentioned
works for you, and your financial situation is not getting any better, debt
settlement might help you to get back on track. Debt settlement plan is often
offered by for-profit companies. It is a process of negotiating with your
creditors to allow you to pay your debt in a lump sum payment in exchange for a
reduced overall debt. The debt settlement company will then collect a minimal
payment of your debt each month. This may sound ideal, but you have to be
careful in choosing a company to settle your debt because of there many who
have lost their property due to crook debt settlement company.
