Credit Cards

Do you want to pay less credit card interest? That is how

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Credit card interest can be expensive. Here’s how to minimize it.

Key points

  • Credit cards are known for charging high levels of interest.
  • There are steps you can take to minimize the amount you pay, such as negotiating with your credit card companies and capitalizing on 0% introductory rates.

Some people build up balances on their credit cards because they lose track of their spending or fall victim to too many impulse purchases (which can happen to the best of us). Other times, credit card balances pile up when unplanned bills come out of nowhere (thanks, old car).

The problem with carrying a credit card balance, however, is racking up interest charges that could be extremely expensive. But this is how you can minimize the amount of interest you pay on your cards.

1. Pay off your balances as quickly as possible

Sometimes carrying a credit card balance is unavoidable. But if you land in that pot, the sooner you pay off the amount you owe, the less interest you’ll accrue.

If you have a sizeable balance right now, take a look at your budget and identify expenses you can cut back a bit to free up cash. At the same time, consider getting a temporary hustle and using your earnings to pay down your balance. You can ditch that second gig once you’re debt-free if it’s too stressful or time-consuming. But working a side job for a month or two could save you a world of credit card interest by allowing you to pay off your debt sooner.

2. Negotiate your existing interest rates with your credit card issuers

If you read your credit card agreements carefully, you’ll see that your card issuers have the right to charge you a certain amount of interest on accumulated balances. But that doesn’t mean you can’t trade with them.

If you’ve been a cardholder in good standing for a long time, a credit card company might agree to lower the interest rate on your debt. Why? It is simple. Credit card companies make money by charging interest (and other fees). Your credit card issuer may prefer to charge you some interest than none, which could happen if you decide to consolidate your debt and pay it off in another way, such as taking out a personal loan.

3. Make a balance transfer

If you owe money on your credit cards but have decent credit, you may qualify for a balance transfer. And if you can find one with a 0% introductory APR, you have a real chance to save money on interest.

Of course, introductory APRs only last for so long. The offer you qualify for can only give you one year of 0% interest. But even if you only get a one-year deferment, that’s better than nothing. And if you can pay off your debt during that time, your savings can be huge.

The option of paying off a credit card balance over time is certainly convenient. The downside, however, is racking up interest charges that could add up to quite a hefty sum. These tips could allow you to limit the amount of credit card interest you accrue and throw away less of your hard-earned money.

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