Ways on How to Lower Your Credit Card Interest Rates
It is fortunate if you’re one of those people who do not take for granted the amount paid on your interest rate. If you currently focus on paying off your credit card debt, reducing your interest rates will help you a lot to save more money. This can also help you pay off your debt faster.
It isn’t new to everyone that interest rates on your credit card serve as a profit, reason why lowering your interest rates would only be feasible if you have a pretty good basis.
Three Options To Lower Your Interest Rates
The following are the three options that can potentially enable you to lower your interest charges.
Option 1: Buying A Lower Rate
This may not be usual, but a few credit cards allow you to avail of a plan to pay an annual fee in exchange for a lower interest rate. For instance, Mastercard offers a 17.5% or 11.9%, regular rate for only $20 a year. This can greatly help if you’re fond of using your credit card rather than cash. So, you might need to check if your institution offers a certain plan as such. If the options listed below are not feasible, this can be an alternative.
Option 2: Threat to Switch To Competitor
The fact is, Banks aims to earn money through your payments on interest. So, if you let them know that you’ve decided to switch to the other credit card company through credit card balance transfers, they will perceive losing potential profit that they can gain from you.
Your conversation may be a pattern similar to this:
Hi, this is Jack Daniels and I have been your customer for 13 years. I called in to inform you that I got a lot of credit card offers recently specifically on balance transfer that is offering 0% interest for 6 months. In fact, their offer comes with a lower interest rate compared to what I’m paying now with you. Well, since I’ve been with you for several years, I’d favor staying with you, but I’d need a lower interest rate in my card. Otherwise, I might be considering one of these offers.
As soon as they offer you a lower rate, if you think it’s favorable, you can accept it; if not you can push through a bit. They may be threatened that you will switch to their competitor. Of course, the offer mentioned should as well be real. If your request if not granted, maybe trying a day or two will do. There might be some other rep who’s more willing to extend their help.
Option 3: Bankruptcy Or Default Warning
As suggested in the second option, your Bank is likely to prefer gaining money than nothing from you. Implying that you’ve mounted up a heavy debt obligation and are currently having difficulties in paying might not be justifiable for you to be granted your request in lowering your credit card interest.
You can call your institution, explain your current financial situation. You should convey to them that you’re so much willing to settle your debt but is currently in an unfortunate financial state. Also, you must be respectful at all times. In cases where the person you’re speaking with can’t extend help, you can politely ask for someone that can. Besides, you’ve built a good relationship and rapport with your Bank, you can quote and bring it up to justify your credibility.
How to Deal With A lower Interest Rate
Once you’re able to lower your interest rates, it’s a great chance to take a step in paying it off once and for all. You might think that lowering it’s a great deal, making it cheaper is good but not that great if it takes you 20 years to pay it off. So what you can do, is pay more than the minimum each month to pay it off faster.
Besides, lowering your interest rates is good at times when you’re facing temporary financial struggles such as job loss. So, as soon as you get back on track in aligning your finances, ensure that your priority is to knock down your debt. Moreover, lowering it down, should not imply confidence in spending beyond your budget. Remember, the more money you can save the more you can afford debt payments.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.