Reduce Interest Rates

By: EconomyWatch Content   Date: 3 November 2009

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It is a known fact that consumers love using credit cards, as much as they hate paying interest on the payments they make. This is when the credit rating of that person takes a nosedive making them ineligible for any future cards and other loans. Considering that for the average credit card the interest rate is somewhere in the vicinity of 15% — up from previous rates of around 10% — it’s not difficult to determine why people have a repulsion against interest rates. On the flip side, companies issuing the cards make a lot of money on interest rates. For a lender, getting a guaranteed interest over and above the principal amount ensures a solvent income on a yearly basis.

 

Reduce Interest Rates: Some Reduction Strategies

 

The main reason anyone would want to reduce their credit card interest rates is reduce the associated debt. Towards this, we suggest a four-step strategy:

 

Step 1: It is always advisable to make oneself a valued customer of the bank or the lender. A valued customer uses his credit card and pays the minimum balance due on a regular basis. Taking the initiative, they can call up the bank and ask for a lower rate of interest. The bank will surely comply.

 

Step 2: Consider changing to a different credit card company. Alternatively, you can also consider a balance transfer to a second credit card company, which offers 0% interest or other benefits of transferring the debt. However, one has to be prepared to pay off the card debt and cancel it by the end of the term or face another high interest contract.

 

Step 3: Explore the option of locked-rate credit cards; the rate for a specific charge is locked in and can never change. If one can negotiate a good rate, it can really prove helpful in the long run. The cards are not as beneficial as they seem at first, but they can be a viable option.

 

Step 4: Finally, if the credit card one is using is causing financial hardship, you may want to claim hardship with the credit card company. Filing for a bankruptcy can offer a much lower rate of interest or a reduced monthly payment in the short-term.

 

 

 

 


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