Credit cards have become almost a necessity these days. Everyone has one (or several) and we’re bombarded by credit card offers daily. With so much available credit, it can be tempting to spend more money than you have, especially when you see everyone around you doing it. The problem is that spending on credit inevitably costs you more money. With interest rates reaching 30% on some cards, you may find yourself struggling to pay them off.
Here are top ways to save money on those high-interest rates.
Reach out to Creditors
The easiest and quickest way to reduce your credit card interest rates is to call the credit card company and ask for a lower rate. This may seem silly, but often credit card companies will reduce your rates if you just ask for it. This varies by credit card and your personal credit profile. I have had this work for me in the past, but I’ve also had my request denied, despite having excellent credit. There is no guarantee that this way will work for you but it’s definitely worth trying.
Engage in Credit Counseling
A reliable consumer credit counseling agency will consolidate all of your high-interest debts into one, lower-interest payment. They do this by negotiating rates and payoff dates with the lenders. Then you pay the agency your monthly payment, at a rate that may be less than half of what you were paying the credit card companies. The credit agency pays the credit card companies on your behalf. There is no negative effect on your credit. Another benefit of this plan is that you only make one payment per month and the payments are time-limited. You may end up paying the same amount per month that you were paying prior to the consolidation, but your debt can be paid off years sooner. There are many fraudulent businesses that call themselves credit counselors, so make sure to do your research here. Check the National Foundation for Credit Counseling’s directory.
Transfer your balance to a 0% Interest Card
Most creditors offer a 0% intro APR on purchases, as well as offering zero interest on balance transfer for a period of time, so take advantage of that! Often these cards charge a transfer fee, usually, 3% of the total balance transferred, but that is a lot cheaper than the interest you’re paying to carry a balance! Consolidate and transfer all of your high-interest rates to one card with zero percent interest and aim to pay it off by the end of the promotional period. Even if you can’t quite pay it off in time, you’ll have saved yourself 12-18 months of interest payments. And who knows, you may be able to do this again with a new card.
When you’re stuck in credit card debt, it can feel hopeless. There are always options to reduce your costs and increase your income. In the comments below, let us know your top tips for limiting spending and bringing in the dough.