Credit Card Rates
4.99, 7.89, 19.79 – what does it all mean? Credit card rates can be confusing,
scary, and downright frustrating if you allow them to get to you without the
proper knowledge. All of the decimal places just add more numbers into the
confusion, making for one hell of a response when you receive that credit card
statement 8 months into your tenure with the credit card. But, when dealing
with credit card rates, there is really only one main thing to remember: The
lower the better! Ideally, when you start out with most credit cards, you
receive a 0% credit card interest rate, which allows you to purchase items and
pay back the exact amount of credit borrowed (provided that late fees are not
in the picture). However, following that introductory period, things can get a
little hectic but still very manageable.
How They Make Their Money
Credit card interest rates are the basic way in which credit card companies make
their money. If you choose not to pay off the entire balance of your credit
card and put it off for another month, credit card companies have no problem
with this, but they will charge you with credit card rates that allow them to
make money in the process. For instance, a 4.99% credit card interest rate
charges you just under 5% of your balance per month that said balance exists.
This amount may be as little as a few dollars but could also reach a
substantial amount if not tended to properly.
Pay Off Your Bills!
The best way to avoid paying extra money due to credit card rates is to pay off
your balance every month the best you can to avoid the credit card rates from
causing your balance to increase again. Many credit card companies actually
keep people in debt to them with the credit card rates, but do not have that
approach when paying off debt. Look to eliminate debt by taking substantial
chunks of debt away while not spending anymore money via credit. People fall
victim to credit card rates at times, but recognize that credit card rates are
in place to keep you paying your bills. Don’t fall behind and you will
successfully eliminate your debt without the worry of credit card interest
rates. Check around for the lowest rates, too. When it comes time to pay your
bills, you will thank yourself for it.
Tips For Lowering Your Credit Card Rates
Finding a low interest credit card rate can be quite difficult these days,
especially if you have no credit. Frankly, you may have to deal with the high
interest rates for a while until you can prove yourself as a responsible person
financially. In order to make this high interest time period as short as
possible, here are a few tips for creating a spotless credit report and
lowering your credit card rates in no time.
Pay On Time Every Time
Missing even one payment can have a snowball effect, driving up your credit card
rates. Always try to make your payments on time and note if there is a specific
time of day the payment is due. If so, strive to get your payment in at least a
day early to avoid late charges and interest rate hikes. Missed payments and
the like remain on your credit report for up to seven years. As you can see,
even making a mistake once can make a big difference in how you will appear to
brokers as you attempt to buy a home for instance. To keep your credit card
rates low, pay on time.
Pay In Full
If at all possible, try to pay off your balance every month. This way, you avoid
having to pay interest on the amount due, and you keep the reputation as a
responsible consumer. Another quick tip for lowering your credit card rates:
never spend more than you have currently in your bank account, unless there is
an emergency of course. And no, an emergency is not a sale at the local
department store. By spending only the amount of money that you actually have
in your bank account, you don’t pose the risk of going into debt and can pay
off your balance each and every month.