5 Effective Ways to Lower Your Credit Card Interest Rates

5 Effective Ways to Lower Your Credit Card Interest Rates
Although many people feel that credit cards are the bane of modern existence, the truth is that they can be useful in a number of ways. Certainly every adult must learn to use credit responsibly, but if you do so, you can use credit cards as a means of building a strong credit history and a top tier credit rating, helping you to secure funding down the road for major purchases like a car or a home.

Many credit card companies these days offer all kinds of reward programs designed to lure new customers, incentivize loyalty and add value. You can use the dollars you spend to earn points that can be redeemed for travel or other freebies.

However, you need to be smart. You don’t want to negate the rewards you earn by paying unduly high interest rates. Starting out, you’re likely to have no choice but a high-interest card. However, there are a number of effective ways to lower your credit card interest rates later on.

1. Reduce Outstanding Debt

If you carry a high balance on your credit card and never pay it off, or worse, if you pay late or miss payments altogether, you might find it difficult to secure lower interest rates. The problem is that your rate is based not only on economic markets, but also on you, including your credit history and credit rating. In order to have some leverage to secure the lowest possible interest rates, you’ll want to reduce debt, specifically your debt-to-income ratio, and prove that you can manage credit responsibly.

2. Improve Your Credit Score

There are several ways to improve a low credit score. To start, you need to know what your credit score is and why it might be lower than you’d like. You can do this by ordering a free credit report from a variety of sources. With this document in hand you can begin to address black marks and clear up outdated or erroneous information on your report. Next you can start to reduce debt and begin to improve your credit score.
3. Negotiate

You’ll never know what you can get until you ask, so politely negotiate with credit card companies to see what kind of rate you can secure. Make sure you understand what leverage you have, such as a good credit rating or long-term loyalty to a particular company. Both can help you to negotiate for a better interest rate.

4. Shop Around

Like any other consumer purchase, you need to shop around in order to determine which high interest credit cards to avoid and which low interest ones to consider. The onus is on you to get the biggest bang for your buck, so to speak.

5. Transfer Balances

Many people start out with multiple credit cards to build credit, but once you’ve built up a decent credit history and a good rating, you needn’t continue to carry or use high-interest credit accounts. So transfer balances to the lowest interest cards, cancel the higher interest ones, and then see about getting newer cards with even lower rates if you can.

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