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3 Fail-Proof Strategies To Cut Your Credit Card Interest Rates

3 Fail-Proof Strategies To Cut Your Credit Card Interest Rates

Credit card debt is a fact of life for many of us. This article isn’t about stating the obvious — avoid credit card debt, stay within your budget, don’t be late. It’s about how to make a bad situation better.

Regardless of the reasons you’re stuck with credit card debt, there are things you can do to ease the pain. In fact, we’ve found a few ways for you to turn the tables on the banks and have them pay you to borrow their money instead of the reverse! Seriously — keep reading to find out how.

Balance Transfers: Go Surfing

This is one of the most cost-effective ways to reduce the interest on your existing credit card debt. All you have to do is transfer your high interest balances from your existing credit cards to a new credit card with a low interest balance transfer offer. There are several balance transfer promotions in the marketplace that offer 0% interest rates for 12 months or more.

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The banks are so hungry for new customers that they’ll lend you their money for free for a year or more in the hopes you’ll stay a customer with them over the longterm. But in this case, loyalty doesn’t pay.

Thousands of people surf from one 0% balance transfer offer to the next, never paying any interest on their credit card debt. This is true in the U.S., U.K., and even for balance transfer offers in Canada. Just make sure to never make a late payment and watch out for hefty balance transfer fees.

0% Purchase Rates: Pump & Dump

If you’re about to make a purchase that you know you’re not going to be able to pay off right away, get a new credit card with a 0% interest rate on new purchases.

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Again, banks are more than happy to offer you 0% rates for 12 months or more on new purchases. But remember: they only do so because more people screw up than not. Know the rules, stick to them, and you’ll have those fools funding your 0% rates. Break the rules and you’ll be the fool.

We have one Golden Rule to stay out of trouble: use automatic pre-authorized payments to pay down your debt. Find out your minimum monthly payment and the due date. Set your pre-authorized payments to meet or exceed the minimum payment and you’ll never have to think about your loan again. All your payments will be automated, taking away the risk of a late payment, and losing your 0% rate, out of the equation.

Renegotiate

Let’s say you already have credit card debt and you can’t get approved for a balance transfer. Not all is lost. Believe it or not, banks are just as scared about you defaulting as you are.

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Call your bank and ask them to lower your credit card interest rates. Not every request is granted, but there is absolutely zero downside to asking. The worst that can happen is that they say no. Big deal.

That said, there is a technique that will increase the likelihood that the bank says yes. First, ask the bank if they can lower your rates. See what they offer. Then, let them know you’ve received several 0% offers from competing banks Y and Z. Tell them you’ve been a customer of theirs for a long time and would prefer not to go through the hassle of applying for a new card if they can match the offer. If that doesn’t work with the first customer service representative, politely ask to speak with their supervisor — supervisors often have more authority to offer lower rates.

Conclusion

Just because you’re stuck paying high interest rates on your credit card debt doesn’t mean you have to do so forever. Put a little effort in and you may have the banks competing to offer you 0% for the privilege of servicing your debt. When the rules don’t work for you, sometimes it’s best to change the rules or start a new game. Here’s your chance to have the banks lend you money on their dime!

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Featured photo credit: Republica / Pixabay via pixabay.com

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Marc Felgar

Marc Felgar is an aging, health & senior care expert focused on improving the lives of mature adults.

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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