You should look for lower interest credit cards when your current credit card APR increases and you find it difficult to meet your monthly obligations. A card with lower interest rates can help you pay down credit card debt much faster.
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Sometimes, acquiring a credit card with low interest on balance transfers is a very wise decision. But, it is important that you stop using your old credit card as soon as the transaction is complete. You may become tempted to start using the old credit card again; beware, this is the fastest way to fall into the abyss of debt. Take advantage of the fresh start.
While some experts, like Suze Orman may recommend that you cancel your high interest credit cards immediately following the balance transfer, this may not necessarily be your best choice; especially if you have had this credit card for a long time.
Canceling a credit card wipes the data from your credit history. According to myFICO.com, 15% of your credit score is the result of your length of credit history. Closing your account may cause damage. It may be better for you to keep your credit card active and use it for emergencies only.
Introductory Low Interest vs. Fixed Low Interest
A low interest credit card has two offers, either the APR is a low introductory amount that increases after a few months or it is fixed and steady. They can be somewhat tricky to select because they each have specific stipulations attached.
If the introductory rate is low, all purchases are subject to the low APR until the expiration. Payments will be lower because the APR is lower.
Once the introductory rate is over, any purchases and outstanding debts are now held to a higher APR and may take longer to repay. The advantage of low interest credit cards is if you have several months to pay for large purchases and if you can manage to pay them in full, you will save lots of money.
Picking a Low Interest Credit Card
When picking the lowest interest card available, you must consider several factors, including any additional fees. For example, some credit cards may provide a low APR, but have large annual fees up to $60. When the annual fee is applied, the interest rate can soar higher. Always look for a credit card without an annual fee.
Another way you can be deceived is with the 0% or very low introductory rate. These types of credit cards must be reviewed very closely. Some may provide these rates for as low as six months and once the time frame ends, the rates can reach 19% or higher. Instead of falling for the introductory rates, go for credit cards with variable or fixed rates that are less likely to increase exponentially.
Credit card companies that offer 0% or extremely low balance transfer rates may charge an additional balance transfer fee. You may be under the assumption that the entire process is free of charge and receive your first bill with fees attached. Your goal is to find stable offers with very little fluctuation.
Ask Your Credit Card Company to Reduce Your Interest Rate
One of the most common ways people are reducing their overall credit card debt is to negotiate interest rates. This may seem like a simple solution, but it actually takes quite a bit of business savvy to be successful. Remember, the credit card companies don’t want to lower your interest rate because they will lose money. However, if you have the skills, you can convince them to give you a better deal.
Before you make the call, complete a small checklist. You should have your current credit report and credit card statements from the past six months. These documents will help support your request. You are entitled to a free copy of your credit report yearly from each of the major credit reporting bureaus.
Review the contents of your credit report carefully and note any errors; you will need these corrected before you contact your credit card company.
Reach out to your credit card company with confidence knowing you have excellent credit and your performance with them in particular, has been outstanding. You have plenty of ammunition to begin your request. Start by explaining how you saw an offer on their website or that you saw something from a competitor. Once they review your account information, they may grant your request.
If they deny your request, you can let them know that you will take your business elsewhere. Have the competition’s offers handy so you can give them the details. If they value you as a customer and you threaten to close your account, they may go ahead and decrease your APR.
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