Don’t settle for your current interest rate

It can seem that a credit card interest rate is set in stone.  This is not the case at all, and interest rates can often be cut drastically through a few simple steps.

The first step may not seem very obvious, and that is to bargain with current credit card providers.  Credit card providers are often keen to keep customers, and they are prepared to cut interest rates in order to keep some of their clients.  It is often a good idea to talk to the client retention officer who will be empowered to go outside the accepted procedure in order to keep clients, and this often includes the cutting of interest rates to match the interest rates that are offered to new customers.

It can often be the case that there is an outstanding balance on a high interest card and unused credit on a lower interest card.  Simply transferring the balance from the high interest credit card account to the lower interest credit card can save a considerable amount of money very quickly. There may be a balance transfer fee charged, but this is usually quite low and will be made up within a few months through the difference in the interest.

It is also a good idea to concentrate any repayments on the credit card with the highest interest rate.  The way this is done is by paying the minimum repayments on all the other credit cards while pushing any excess repayments on the highest interest credit cards.  This can radically reduce the average interest rate over all the cards.  By paying off the higher interest credit cards it minimises the proportion of the repayments that are paid on interest and shortens the time for interest to be paid off.

When all these steps have been completed, it may be a good idea to shop around for credit cards with lower interest rates.  Unless the card holder is looking to actively manage their credit cards or to pay off the credit cards very quickly the credit card holder should avoid low introductory rates and look for long term balance transfer rates.  It is quite important that the credit card holder does not spend on these cards as the credit cards will charge at a higher rate for spending.

Consolidation loans are often tempting because they offer a lower interest rate.  A borrower should only use a consolidation loan if there is an intention to repay all the debt and there has been considerable movement towards this goal.