Tuesday, April 03, 2012

4 Ways to Reduce the Interest You Pay on Your Credit Card Repayment

It's guest post time courtesy of Andrew Black:

Are you anxious of the high interest payments you shoulder on your credit card repayments? As you aim to improve your personal finance, you may have to intend to reduce the interest charges you carry each month. Just imagine how much money you throw away just by paying interest. The amount could be used to bolster your savings or buy necessary items. Here are some recommended ways to do so.

1. Call your credit card company

Many consumers are unaware that they could actually call their credit card companies to request lower interest rates or to waive certain fees and penalties. Many credit card firms are considerate and understanding especially these days when the impact of the recent global financial crisis is still very much felt. To lower the interest rate you are paying, you should call the credit card company and explain how financially difficult it is for you to keep up. They may then offer you a better rate.

2. Lower your credit card debt rapidly

If the interest rate could not be adjusted, the best way to significantly lower the costs you pay on interest is to repay the debt as soon as you can. In general, credit card debts get more expensive as they remain. That is because interest rates are imposed each month that there is credit card balance left in the account. If that debt could be eliminated, your credit card company would not have to implement interest charges and other fees.

3. Use balance transfer facilities

There are other credit card products that offer balance transfer transactions. Interestingly, most of those cards come with much lower interest rates. Some may even offer a 0% interest rate on balance transfers for a limited period. Take advantage of such offers. How does it work? You would transfer your current balances into another credit card, the one with the low-rate or 0% balance transfer facility. By doing so, your current balance would be repaid in full using a new debt from a better credit card product. It is like transferring your debt to a lower-rate card.

4. Consolidate debts 

The best way to lower the interest rate you pay not just in one credit card but in all is to consolidate your debts. You could use balance transfer credit cards or obtain specific debt consolidation loans. If you have a property you could use as collateral, getting a mortgage would be better. That is because mortgages are secured and as such come with much lower interest rates. Use the loan proceeds to pay for your credit card debts once and for all so that interest charges on those could be immediately curtailed.

The sooner you get rid of your credit card debt, the better it will be for your personal finance. In the future, try to avoid piling up credit card debt. It may also help to use low-interest cards. The best way to avoid credit card problems would still be to avoid using your plastic cards in making significant purchases, if you could help it.

Andrew likes sharing tips online. He has worked in the finance industry specializing in credit card debt and consolidation loans

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