Five Ways to Pay Less Interest On Your Credit Card Debt

How to pay less interest on credit card debts

Paying interest on your credit card debt is what makes your debts even worse; you want to pay less interest on your credit card debts. It’s not enough that you owe money to a business for happily paying your expenses on your behalf, now they want you to actually pay them for their services and for tying up their own funds. Interest, if you are not familiar with the concept, is the money you pay to a credit card company on the balance you owe. The balance accumulates interest every month if it is not paid in full by a specific date.

There are some credit cardholders who believe that interest accrues on all purchases, no matter what. This is not the case. For one, interest does not accrue on any purchases that are paid in full before the interest date approaches. Additionally, many credit card companies offer special financing to their new cardholders. Not something that is typically offered to existing cardholders, however, it’s nothing that’s going to save you significantly when it comes to interest. If you have a new card on hand and you choose to transfer a balance from an older card, that’s when you get to experience a length of time in which you owe no interest on your credit card debt. That is one of the ways we will talk about not paying credit card interest in full as we go on. The goal here is to pay less interest on your credit card debts so that you may become debt free faster than you imagined possible.

First, we want to discuss with you how important it is that you pay off your credit card balances in full each month. Your credit card is not a problem; your spending and payment habits are the problem. You and your best friend might have the same credit card, with the same rate and the same shopping habits all the time. However, if she chooses to pay off her credit card balance in full each month, she’s already winning in terms of her financial success. She’s not paying any interest; and you’re working on learning how to pay less interest on your credit card debts. Do you see how the card is not the problem? It’s the same card. It’s what my husband likes to refer to as ‘user error’ (When I’m in the kitchen and cannot make things work).

Credit cards are no joke; using yours incorrectly can ruin your financial future. If you have too much debt and not enough available credit you might realize that it’s not just late payments and missed payments that ruin your credit; it’s too much debt, too much interest and too much spending. It won’t take you long to realize that with too much credit card debt, you become less likely to be able to do the following:

  • Buy a home with a low interest rate
  • Buy the home you want
  • Finance a car with a low interest rate
  • Apply for any loan with a low interest rate
  • Become approved for new credit cards or even loans

If you know you have credit card debt, you’re going to want to learn how to pay less interest on your credit card debt so that you can pay off your debts faster, more efficiently and without spending nearly as much money. Wouldn’t you rather spend $1,000 paying off a $1,000 debt than spend $2,000 paying off the same $1,000 debt? We can tell you how to pay less interest on your credit card debt; and one of these tips and tricks is bound to make your financial aspirations seem a little more realistic.

Call Creditors and Ask for a Lower Rate

If I told you it sometimes takes nothing more than one simple phone call to have you paying less interest on your credit card debt in no time, would you be impressed (and no, it does not involve calling your parents and asking for a loan)? Your creditors very likely want to keep your business if you are a good customer – note; this is something that will only work with really good customers who have really good credit, a great account standing and a longer relationship with the credit card company.

If you are all of these things, consider calling your credit card company and asking a customer service representative to lower your interest rate. This is something that you might be able to haggle with them simply by asking. Inform them that you’re aware that you’re paying this much, and it’s stretching you a bit thin. Ask if they are willing to lower the rate. It might surprise you to learn that many times, these companies are actually quite happy to lower your interest rate and work with you to keep your balances lower.

Another idea is to call the credit card company and tell them that another credit card company offered you a lower interest rate. Since your current card company knows that paying less interest on your credit card debt is a goal in any normal human’s life, chances are quite good the company will either match the offer from the other creditor, or they will attempt to beat it in some way. Now; you do have to be a great customer with no late payments, missed payments and you have to have good credit to make it even possible to ask this question. However, it’s one way to pay less interest on your credit card debt, and it’s worth the effort involved.

Transfer Balances

This is an option we bring to you lightly. It’s not always in your best interest to transfer balances to a new card, but sometimes it is. A balance transfer is simply this; it is you taking the balance of one card with a higher interest rate and transferring it to a new card that has a lower interest rate and likely an introductory period in which you will pay no interest at all. The concept is a good one, but it does have some interesting points; it’s not just a magical way to pay less interest on your credit card debt.

For example, you can transfer a balance and save on interest, but you have to do so the correct way. For one, take note of the rate rules. Many cards require that consumers pay a fee to transfer a balance at any given time. This is anywhere between 3 and 5 percent of the balance you are transferring, which is actually a horrible way to pay less interest on your credit card debt, since you are now paying more. A new card offer might require you transfer your balances within a specific number of days to avoid paying this fee all together.

Additionally, 0% APR financing offers on balance transfers do not last forever. Do not let the 15 months or whatever time frame is being offered to pay no interest trick you without checking out the additional fine print. For example, how much interest will you pay after that? Are you absolutely certain you will pay off that balance in the allotted time frame, or will you continue to carry a balance afterward? You need to ask yourself these questions before you go transferring balances as a way of paying less interest on your credit card debt.

Now, this is one of the absolute best methods of paying less interest on your credit card debt. If you can pay that outstanding balance in full before your no interest on balance transfers period is over, you will save significantly not paying any interest.

Focus on One Debt First

Sometimes you just have to take the longer road and work harder to ensure you are able to pay less interest on credit card debt, and sometimes it’s not all that easy. Do you have multiple debts you have to pay off and all of them are continuously charging you interest on your outstanding balance? Now is the time to focus on the one that is the most expensive. There are several ways you can look at this; but we have a favorite. We like the idea of paying off the cards you owe money on one at a time and paying the minimum on the rest for a time. If you want to pay less interest on your credit card debt, you’d like to pick the card that is charging you the most interest first.

However, you might have to do some math. For example, you might have a card that is charging you 21.99% on your outstanding balance of $1,000 and another that’s charging you 17.99% on your outstanding balance of $5.000. It might seem as if the one with the highest interest rate is the card you need to pay off first because it’s the most expensive, but it’s not; the balance on the lower rate card is significantly higher. This all equates to a lower rate on a higher balance and that makes a huge difference in the overall interest rate being charged to your account. If you want to pay less interest on your credit card debts, the one being charged the most – regardless of the rate – is the one to focus on first.

Now that you know which card is the most expensive card in your wallet, we thought we’d tell you how to go about using this particular method of paying less interest on your credit card balances. What we want you to do is apply as much as you can toward this balance. Pay everything additional that you have, including any excess you were paying over the minimum payment on your other cards until this balance is paid in full. Once it is paid in full, you will then take the money you were paying to lower the balance on this card and apply it to the other credit card debt that you have to pay that one off, too. It’s a great way to pay less interest on your credit card debts.  You can do this, too, with any number of cards. Just focus on the one charging you the most interest in accordance with your balance so that you are making wise financial decisions from this point forward.

Pay more than the Minimum Payment

We all know that the minimum payment due on any credit card is not much. That means that you might be excited to know that you can spend, spend, spend and only pay very little (hey! A European vacation that cost me thousands and I only have to pay $25 per month? Awesome!) each month since that’s all your card issuer requires, but it’s not a good idea. For one, you need to pay that card off in full every single month. This allows you to avoid paying interest, which allows you to pay less interest on your credit card debts – because you now have no credit card debts. Additionally, it’s also important that you realize paying only the minimum might sound great, but it’s costing you a lot more.

The minimum payment due covers the interest being charged to your account each month, and very little principle. This means you could pay a $2,000 debt for more than a dozen years if you pay only the minimum and ever expect to pay it down at all. What you have to do is pay more than the minimum amount due every single month if you want to pay less interest on your credit card debts. How does that work, you ask? Quite simply, really; however your interest accrues; it only accrues on the balance that is outstanding. When you pay more than the amount that is due, you pay down the amount that is outstanding. The less that’s due, the less interest you pay on your credit card debt.

Even if you can only afford an additional $20 per month, that’s an additional $240 per year you are not going to pay interest on when you are paying off your card. That might not sound like much when you think about it, but every little bit helps. Pay as much as you can, but always pay more than the minimum amount due if you want to really pay less on your credit card debts and if you ever hope to pay those debts off in full.

Make Two Minimum Payments

This is a method of payment that allows you to do something that might trick you into thinking you’re not doing anything. This is very much like paying more than the minimum amount due at the time your bill is due each month, which is a way to help you pay less interest on your credit card debts. However, this is also a great way to ensure you are paying off your card a lot faster. See, there is a trick to this; it allows cardholders to feel as if they are making two payments per month (which they are) but it seems cheaper than paying more at once.

Think about it; it’s all in your mind. Let’s say your minimum amount due each month is $30 and it’s due on the first of the month. So, you pay $30. You’d love to pay $60, but all at once that just seems like a lot, right? So what you do is then pay an additional $30 on the 15th of the month. This seems like you’re making one payment since it’s such a small amount, but you’re actually making two. You’re now paying additional $30 per month to lower your principle balance, which is going to make your interest less expensive.

To pay less interest on your credit card debts, you have to pay down the balance. There are many ways you can do this, but you have to do it in a way that allows you to get the balances paid off in full. You can consolidate, but that’s a personal decision that is directed largely by your financial situation, so it’s one you have to consider lightly. There are always options when it comes to paying less interest on your credit card debts, and we think that one of the options with which we have provided you will work spectacularly. You need only take a look at your finances and decide which method will work best with what you have to offer.

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