Credit card companies charge a high rate of interest when you have an outstanding balance on your credit card. This interest is often a small amount less than the minimum payment each month so that you are paying very little on the debt each month.
Take a look at these tips designed to help you save money in interest and help you pay off your credit card debt much sooner than you expected.
Take a close look at your credit card statement to see how much of your payment actually goes in interest each month. There are many credit card companies offering 0% interest on new cards and this is one option that will help you save money.
Usually this offer is for transfer balances and for a limited time, such as 6 months. If you transfer the balance from a high interest credit card to one that has 0% interest, then when you make your payment all of the money goes toward paying off the balance.
Some of the 0% interest cards do charge a fee for balance transfers, such as 2% or 3% of the amount. This could be a substantial amount of money if your balance is high. When you start looking for a 0% credit card, take a close look at the fine print to find one that does not include this fee.
Once the interest free period is over, you can apply for another card that doesn’t have any interest and then transfer the balance that you still have left to repay onto this new card. You do have to make sure that you cut up the older cards and cancel your account.
If you are unable to find a credit card with 0% interest, there are lots of low interest credit cards for which you can apply. Some of these allow you to transfer the balance for a low rate of interest for a set period of time or until you have repaid the balance in full. In this way you could cut the interest you pay on the balance down from 30% to about 2% or 3%, which does amount to saving a lot of money each month.
If you have been a customer of the credit card company for a number of years, you can simply call the company and ask that your interest rate be lowered. Most people do not know that they can do this and of course, the credit card companies don’t advertise that the possibility exists.
Most companies will do this if your record shows that you have been diligent in making your payments each month. You could also tell them that you are thinking of transferring your balance to a 0% or a lower rate interest card and it is very likely that they will match the lower rate of interest to keep you as a customer.
You can also start your own repayment schedule in which you take steps to manage the credit card debt through higher monthly payments. You could take the card with the highest rate of interest or the one with the lowest balance and pay an extra amount of money each month until you have a balance of £0.