Everyone knows that the quickest way to start paying down your debt is to lower the interest rate on the existing debt. Lower interest rates mean that you’re paying less each month in interest and in turn can pay more each month to the principle balance on your credit card. This results in paying off debt more quickly. It also means that you’re paying less to the credit card companies in the long run so it’s something that’s wise to do even if you’re not planning to immediately pay down the debt. But how do you go about lowering your interest rates on your credit cards?
Follow this series of quick tips for lowering your interest rates immediately:
- Call the credit card company and ask for a lower rate. This doesn’t always work and it’s increasingly difficult during this credit crunch but it never hurts to ask. Even if you only get the interest rate lowered slightly, you’re better off than you were before you made the call. Be firm and calm when discussing the issue over the phone and be quick to point out if you’ve been a good customer with on-time payments.
- Consolidate your debt but do it carefully. It’s typically easiest to get a lower interest rate if you’re consolidating all of your debt into a low-interest loan. This is often done through home refinancing loans but may be done through balance transfers. Make sure that you’re smart about lowering your interest rate this way. Be aware of fees associated with the transaction. Make sure that you don’t include debt which already has a lower interest rate than that offered by the consolidation loan. And then make sure not to use the freed-up credit to run up debt again.
- Start budgeting and be more responsible with money. You will be able to get lower interest rates if you have a better credit score so start working now to improve your credit rating. Do this by getting organized with your finances so that you can make sure to make on-time payments to all of your lenders. The better you are as a borrower, the better interest rates you’ll get in the long run.
- Look closely at the interest rates on your card. Many of your cards will carry different rates. For example, you may owe $1000 in purchases on a credit card at a rate of 19.99% and $5000 on the card at a rate of 4.99%. Your payments are going to first go towards the $1000 that you owe. If you can pay off that $1000, you’ll only be paying a 4.99% interest rate on that card. Work to pay off all high interest rate balances first to steadily decrease the overall amount that you pay in interest.
Lowering your interest rates is something that will require you to be organized with your finances. It will also require some will power in terms of budgeting and future spending. However, it’s worth it in the long run when you’re spending less on debt and more on life.