By Tanya
One of the first things that people look at before accepting a credit card is the interest rate. The rate offered to you will differ from the one that is offered to other credit card customers because it is based on your credit score and credit history. For instance, a person who has had the card for many years and has always paid on time may have an interest rate of 10%. However, those who are new to credit or have poor credit may have an interest rate in the mid to high 20’s. Interest rates can make a huge difference in the amount you pay monthly and the time it will take to pay the card off, but there is good news: there are legitimate ways to save credit card interest rates.
Step 1: How much interest are you paying?
The first thing you must do is find out how much you are paying in interest. If you have never really gone over your credit card statement, you can usually find your annual percentage rate at all the way at the top or all the way at the bottom of the statement. If you have a really good understanding of interest rates and math, you can find your APR, combine it with what you owe and figure out how much you are paying and will be paying until the card is clean. Take a look at this example:
Mrs. Jones owes $10,000 on her credit card. Her interest rate is 29%. She is only able to make the minimum payment which means that in the end she will have paid out $85,500. Now replace the 29% interest rate with 9% and she will end up paying $14,000. This is a difference of over $75,000. Looking at this it is clear to see how important knowing what your interest rate is. If you do not know this information you cannot fight to get it to a lower level.
Step 2: Shop around for lower rates
Pull out your cards and get online to do some research. At DontSpendMore.com you can compare interest rates offered on different credit cards and sign-up for the lowest offer. You may be shocked to see that new customers are being offered rates that are much lower than yours. Imagine seeing your credit card being offered to newbies at a 12% APR when you are paying over 20%. You may not be able to get the 12%, but you might be able to get it down lower than it currently is. However, you have to have this information handy before you call your credit card company so that you are prepared for a negotiation.
Step 3: Compare national averages
The next step to take is to compare the national averages to your own rate. There are several places online where you can get this information. In order to figure out how your rate matches up you must know what your credit score is. Your rates are directly connected to your FICO score — and these days other scores as well. This information will also help you in your negotiations when it finally comes to that.
Step 4: Do the math
Now that you know your credit score you can figure out what rate you should really be paying. Since many people do not know about this aspect of the credit card world, it often slips past them. This is something that credit card companies depend on. You can figure out the proper rate for you by viewing a website providing national averages.
Step 5: Call The Credit Card Company
Now that you are armed with knowledge, it is time to call your credit card company. For many people it feels awkward to ask for something from a business, but do not be afraid or feel intimidated. They are there to serve you. Explain your situation and see what you are told. Many times the first person you speak to will say that there is nothing they can do to help you. When this happens (and it will), ask to speak to someone who can help you. Do not take no for an answer and do not give up until you get someone on the line who can deal with the issue at hand.
Getting your interest rates lowered is not something that happens overnight; it is a process so you must be willing to do the work and be patient. Remember that these companies lower their customer’s rates all the time, not that this is something that they advertise. But, as long as you are in the know you can get what you want out of your credit cards.
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