- Credit cards are notorious for charging high levels of interest.
- There are steps you can take to minimize the amount you pay, such as negotiating with your credit card companies and capitalizing on 0% introductory rates.
Credit card interest can be costly. Here's how to minimize it.
Some people accrue balances on their credit cards because they lose track of their spending or fall victim to too many impulse purchases (which can happen to the best of us). Other times, credit card balances accumulate when unplanned bills pop up out of the blue (thanks, aging car).
The problem with carrying a credit card balance, though, is racking up interest charges that could be extremely costly. But here's how you can minimize the amount of interest you pay on your cards.
1. Pay off your balances as quickly as possible
Sometimes, carrying a credit card balance is unavoidable. But if you land in that boat, the sooner you pay off the amount you owe, the less interest you'll rack up.
If you're sitting on a sizable balance right now, take a look at your budget and identify expenses you can cut back on for a bit to free up cash. At the same time, consider getting a temporary side hustle and using your earnings from it to whittle down your balance. You can ditch that second gig once you're debt free if it's too stressful or time-consuming. But plugging away at a side job for a month or two could spare you a world of credit card interest by making it possible to pay off your debt sooner.
2. Negotiate your existing interest rates with your credit card issuers
If you read your credit card agreements carefully, you'll see that your card issuers are entitled to charge you a certain amount of interest on carried balances. But that doesn't mean you can't negotiate with them.
If you've been a cardholder in good standing for quite some time, a credit card company might agree to lower the interest rate on your debt. Why? It's simple. Credit card companies make money by collecting interest (and other fees). Your credit card issuer might prefer to collect some interest from you than none at all, which might happen if you decide to consolidate your debt and pay it off another way, such as taking out a personal loan.
3. Do a balance transfer
If you owe money on your credit cards but have decent credit, you might qualify for a balance transfer. And if you can find one with a 0% introductory APR, you'll have a real opportunity to save money on interest.
Of course, introductory APRs only last so long. The offer you qualify for may only give you a year of 0% interest. But even if you only get a one-year reprieve, that's still better than nothing. And if you're able to pay down your debt during that time, your savings might be huge.
The option to pay off a credit card balance over time is no doubt convenient. The drawback, however, is racking up interest charges that could amount to quite a sizable sum. These tips could make it possible to limit the amount of credit card interest you accrue -- and throw less of your hard-earned money away.
Alert: highest cash back card we've seen now has 0% intro APR until nearly 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.