Credit cards interest rates are wreaking havoc on many Americans’ lives. The minute you leave a balance on these accounts, you’ll notice that debts continue to increase because of the interest payments, even if you aren’t adding to the debt. Over the years, you will end up paying so much in interest that you are paying much more for purchases than they originally cost. There are several ways of reducing debt, including at least five ways to lower the amount of interest you are paying.
Pay the Bills Early
The first thing you can do is make payments early. If you wait until you receive statements, you are giving their credit card issuers extra days to charge more interest.
Make Smaller Payments on a Frequent Basis
Rather than wait until you have a large sum of money to pay toward your balances, you would be better off making smaller payments on a more frequent basis when you have the money available. A good time to employ this strategy is right after you receive your paycheck. This has the result of reducing the time that interest payments can be compounded daily.
Make Electronic Payments
The best way to make payments is electronically, so the transaction can be completed the same day or within a few days. Consumers who mail a check will not have their accounts credited for days because the check must first arrive, then the creditors still have to process the payment. Lowering interest payments requires that people take as little time as possible to pay their creditors.
Obtain a Second Credit Card
A great plan is to refrain from making additional purchases with a credit card that has an outstanding balance. Sometimes, people can’t make financial transactions without using their credit cards. If this is the case, you can obtain a separate card and only charge as much as you can afford to repay every month. If the new card has a zero percent introductory rate, you will be able to maintain a credit account that is not adding to your debt while you are working to pay down existing debts. However, the only way to make this option work is to never make a late payment, as that can void the zero percent introductory rate.
Ask the Creditor to Lower the Interest Rate
Some people lower their interest payments simply by asking for a lower interest rate. One strategy to have better chances is to say that you may cancel the account.
David Silverstone is a veteran financial writer and credit enthusiast. He is a contributing columnist at Credit Card Insider, the leading provider of unbiased consumer and business credit card selection and discovery resources. You can find more of his work on The Insider Blog.