- Credit cards often have extremely high interest rates.
- These high rates can make paying off your debt more difficult.
- Many borrowers have options for reducing the interest they pay on their cards.
If you have credit card debt, you may have options for reducing how much it costs you.
Credit cards are known for their high interest rates, which is why it is generally best to avoid carrying a balance on your cards whenever possible. But whether you're opening a new card or have an existing one you're working on paying off, you don't necessarily have to accept its high rate as a fact of life.
In fact, you may have multiple options for lowering the cost of borrowing using credit cards. Here are three possible techniques that could potentially work for you depending on your situation.
1. Ask your lender for a rate reduction
One of the simplest ways to reduce the interest rate on your current credit cards is to simply ask your card issuer to work with you. You can make this request by calling the customer service number on your credit card, explaining why you need or want a rate reduction, and asking them what they'd be willing to do.
Card issuers often want to keep your business so if you let them know you're thinking of switching to a different card company or doing a balance transfer, they may be eager and willing to drop the rate on your current card. Likewise, they also want you to keep paying your bill on time, so if you explain you're facing financial struggles, then dropping the interest rate to help you out may also be a possibility.
Generally, you may be more likely to have good luck with this approach if you have had the card open for a long time. You may need to call more than once before you get someone willing to help you out, though. And, in some cases, the card issuer will agree only to a temporary rate reduction -- but that can still help you keep costs down.
2. Refinance your credit card debt
If you are not able to reduce the interest rate on your current credit card debt by asking your card issuer for a break, you have another option that's worth considering. You can apply for a personal loan and use the loan funds to pay off your card.
Personal loans generally come with a lower interest rate than credit cards, so it may be possible to reduce borrowing costs significantly with this approach. As a bonus, your personal loan should have a repayment schedule determined upfront, so once you refinance you'll know exactly when your debt will disappear and how much it will cost you over time.
3. Consider a balance transfer
Finally, another solution to reduce your interest rate could involve transferring the balance on your costly credit card to another one offering a better deal.
Many card issuers want to earn your business and they provide incentive for transferring your current balance from your existing card. This comes in the form of a 0% introductory rate on balance transfers for a limited period of time. You could, for example, find many cards offering a 0% rate for 12 or 15 months if you transfer a balance.
Usually, you'll have to pay a balance transfer fee in order to do this. But the fee is often a small percentage of the amount being transferred. Since you'll then enjoy months of 0% interest, a balance transfer could still pay off.
You should explore each of these three options to decide which makes the most sense for your situation so you can say goodbye to high credit card interest charges for good.
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