These days different credit card companies offer a wide variety of perks. What they still have in common, though, is that they all charge interest on the money you borrow from them. However, interest rates may vary from one card to another. No matter which card you choose, the interest rate charged on your purchases is determined by several factors, and the most crucial is your credit history.
Depending on your credit history, you may get a fair and reasonable rate, but if you have had financial struggles, you may only qualify for a card with a high interest rate. A high-interest rate, in essence, makes your purchases cost more over time. If you have a high balance on your card, your credit company could even raise your interest rate. But, there are ways to have your interest rate lowered quicker.
If you are looking to get a lower interest rate on your balances, you should first contact your credit card company. If your credit is in good standing, they may be able to work with you to obtain a lower rate, but you need to be prepared to explain your current financial situation in detail. It would also help if you researched the competition’s rates to help your case. If the creditor is willing to offer you a lower rate, make sure you get the new rate in writing. If they decline to give you a lower rate, ask what steps you could take to have your rate lowered in the future. Once you know their criteria, you can begin working towards it.
Need to have your rate lowered faster? It might be time to look into a balance transfer. Some credit card companies offer lower interest rates if you transfer your current balance to their card. These companies are willing to offer significantly reduced rates because they want your business. Look for companies that advertise low APRs for balance transfers; however, be aware that many are for a limited time only. Once the promotional period has ended, your rate could go back to where it was previously—or sometimes even higher. To determine your new rate, companies will review your current credit card balance and your credit history. If you don’t get the rate you want or don’t think you can pay the balance off in time the promotion is over, it may be time to consider a personal loan.
Personal loans often offer longer repayment terms, and the interest rate is typically lower than a credit card company would offer. While the terms of a personal loan are also dependent on your credit profile, the chances are high that a lender will offer a lower interest rate over the life of the loan.
Once you have received the personal loan, you can now use that money to pay off your credit card balances. Of course, you will now need to focus on paying your loan off, but you will immediately start to see savings with the lower interest rate. What could be a simpler solution to paying off high-interest balances than a personal loan?
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