If you’re carrying a balance on your credit cards, you’re probably paying quite a bit in interest. But did you know that you can lower your APR? Here’s how.
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Check your credit score
Your credit score is one of the most important factors in determining your APR. If you have a poor credit score, you’ll likely be offered a higher APR. A good credit score, on the other hand, can help you qualify for a lower APR.
If you’re not sure what your credit score is, you can check it for free on a number of websites, including Credit Karma and NerdWallet. Use these tools to get an idea of where your credit score stands so you can know what to expect when you start shopping around for a new card.
Shop around for a lower APR
There are a few things you can do to try to lower your APR. One is to simply call your credit card issuer and ask for a lower rate. If you have a good history with the company and/or you threaten to transfer your balance to another card with a lower APR, the issuer may agree to lower your rate.
Another option is to shop around for a new credit card with a lower APR. This can be especially effective if you have good credit. There are many cards on the market that offer introductory rates as low as 0% APR for 12 months or more. After the intro period expires, the APR will increase, but it will still be lower than your current card’s APR.
You can also try transferring your balance to a card with a 0% intro APR on balance transfers. This can give you some time to pay down your debt without accruing interest. Just be sure to read the fine print before you transfer your balance, as some cards charge high fees for balance transfers or only offer the intro rate for a limited time.
Negotiate with your credit card company
Assuming you have good credit, call your credit card company and ask for a lower APR. If they don’t lower it, ask if they can offer you a 0% APR intro period on balance transfers or new purchases. If they say no to both, it might be time to look for a new credit card.
Here are a few tips to prepare for your call:
– Know your current APR: You should know what rate you’re currently paying before trying to negotiate.
– Know your credit score: The better your credit score, the more negotiating power you have. Check your credit score for free on Credit Sesame to see where you stand.
– Have an offer in hand: If you find a better offer from another company, let your credit card company know. They may be willing to match or beat the offer.
– Be polite: Getting angry or confrontational on the phone won’t help your case. Instead, be cordial and try to build a relationship with customer service representative.
Consider balance transfers
Balance transfers can be a great way to lower your APR, but you need to be mindful of a few things first. Make sure you understand any balance transfer fees that may be associated with your card, as these can eat into your savings. Also, keep in mind that most balance transfers come with a 0% introductory APR period, after which your APR will revert back to its standard rate. So it’s important to have a plan in place to pay off your balance before that happens.
If you’re considering a balance transfer, here are a few things to keep in mind:
-Balance transfer fees: Most credit cards will charge a balance transfer fee of around 3%, so you’ll need to factor that into your calculations. For example, if you have a $5,000 balance and you’re charged a 3% balance transfer fee, you’ll end up paying $150 in fees.
-Introductory APR period: Balance transfers often come with an introductory 0% APR period, but this is typically only for a limited time (usually 12-18 months). After the intro period is up, your APR will go back to its standard rate. So it’s important to have a plan in place to pay off your balance before that happens.
-APR: The APR on balance transfers is usually lower than the APR on purchases, so this can be a good way to save on interest. But keep in mind that the intro 0% APR period usually only applies to the transferred balance, not new purchases.
Use a personal loan to pay off your credit card debt
Personal loans can be a great way to consolidate and pay off high-interest credit card debt. By taking out a personal loan at a lower interest rate and using the loan proceeds to pay off your credit cards, you can save money on interest and pay off your debt faster.
There are a few things to keep in mind when using a personal loan to pay off credit card debt:
-Make sure you compare rates from multiple lenders to get the best deal.
-Be sure you can qualify for the personal loan and that you have a solid plan for repaying it.
-Remember that a personal loan is not a magic bullet – you still need to be disciplined with your spending and make payments on time to avoid late fees and damage to your credit score.