How To Save Money By Lowering Your Credit Card Interest Rates

The popularity of credit cards has led more and more people to rely on credit as an alternative to cash.  Credit cards provide people with a line of credit that they can access any time of the month, for as long as they don’t exceed their credit limit.  Credit cards work in a way that allows you to purchase something now and pay for it later.  Depending on what time of the month you make your purchase, you are given as much as a forty-five day grace period.  Other than this, some establishments even offer installment options wherein you get to purchase something expensive and break down the payments into installments over a few months.  You get to pay the total amount in installments and with a 0% interest rate.  This is very useful for big-ticket items like appliances and gadgets.

The Power of Credit Cards

If used properly, credit cards can actually be quite beneficial.  It enables you to spend even if your paycheck hasn’t arrived yet, and it enables you to purchase something expensive and pay for it in fractions.  These are benefits that you don’t get if you pay in cash.  To encourage usage, credit card companies also give exciting rewards to their loyal users.  It’s very tempting to look at credit cards as a magical solution to everything, but there’s a danger to credit cards that causes a lot of people to be buried in debt. 

Understanding Interest Rates

Before you decide to use a credit card, you have to make sure that you understand how credit card interest rates work.  You have to realize that you’re purchasing things on credit but that doesn’t mean you got a free pass.  You still have to pay for whatever you purchased, otherwise you have to pay for the monthly interest rates that credit card companies charge and your balances will grow, instead of declining.  Once you fail to pay the debt you owe a credit card company, you are charged a certain interest rate that’s usually very steep.  You have to understand that this interest rate applies to your entire outstanding balance, so it’s not merely enough to pay for the minimum amount due.  This is exactly how a lot of people get buried in debt, so you have to be wary.

Seeking Lower Rates

In applying for credit cards, you have to look into the interest rates that different credit card companies offer.  There are several credit card packages available, and not all interest rates are the same.  Ideally, you would want to go with the company that offers you the lowest interest rates possible because this will save you a lot of money, many companies will offer promotional zero percent rates, for 12-18 months.  This gives you access to all the benefits of a credit card but with rates that are not so high.  When you’re already buried in debt, some companies also offer to consolidate your credit card debt for you.  All you have to do is transfer your debt to their company and they’ll offer you a payment package with interest rates that are a lot lower.