Many consumers today are taking advantage of record-low interest rates. Low-interest rates are not just for a car and home loans. Most credit cards charge a higher rate of interest than most other loan types. This does not mean you are stuck. There are two things that you can do to save money on interest.
Lower the Interest on Credit Cards You Already Have
First look at the credit cards you already have. Just calling your credit card company and asking for a lower interest rate may drop a few interest points from what you are paying now. If you are a card holder with good credit history, there is a good chance you could get it lowered. You can say you were thinking of canceling your account and looking for a new credit card with low interest. This may help to get your interest lower. It is however, not a good idea to cancel the card.
It is better to talk to your credit card company before canceling your credit card. Canceling a credit card you have now can lower your credit score for two reasons. Canceling a credit card can lower your credit because now you have less available credit and more debt on your credit report. The other reason this may affect your credit is that older credit accounts are looked at favorably on your credit report. If you cancel old accounts and replace them with newer accounts, you are showing shorter recorded credit history with a particular bank. You can open a new credit card, but keep old credit card accounts open and active.
Consolidate Credit Card Debt
The second thing you can do is shop around for a new credit card deal. The better credit you have, the easier it is to find a low-interest credit card. With a low-interest credit card, you can do a balance transfer and consolidate your debt at the new lower interest rate. It is wise to read the terms and conditions of balance transfers carefully. Some banks charge fees as high as 5% to complete a balance transfer. The low interest you receive on some balance transfer cards may be an introductory offer for a few months.
If the interest rates on credit cards are too high, you may want to consider a home equity loan. Homeowners are finding that they are easier to get approved for than in recent years. Consolidating credit debt this way can allow you to take advantage of lower interest rates. Also, many of these home equity lines have lower interest rates than the best low-interest credit cards. Not only that, but these low-interest rates tend to be fixed. Getting approved for a low-interest home equity loan offers an excellent opportunity to consider home improvement projects or purchasing big ticket items.
Are Low-Interest Credit Offers Right for You?
Taking advantage of these low-interest rates are a good way to pay down debt. You need good to excellent credit to apply all the techniques discussed. Talk to your local banker and check your credit score. If needed he or she may be able to help you improve your credit score. Your banker can help you find the best credit products that their banks offer. Another place to check is your local credit union. Credit unions are known for providing low-interest loans and credit cards.
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I was planning to cancel one of my credit cards because the interest rate is too high and I always carry a balance every month, so it can get expensive. I have had that card for at least three years and have perfect on time payment history. I will try calling and get my interest rate reduced.
I have tried this and it does work. I didn’t like the interest rate on my credit card. I called up and they reduced the interest. No need to cancel your credit card Adam.