Over the past several years, many of us have watched our credit card interest rates climb to ridiculous levels. We might have all started with 12% (or better rates) but these days, interest rates of 20.99% and higher seem to be the norm.
Just because our credit card interest rates are high doesn't mean the rates have to stay there indefinitely. All it takes is a little persistence to bring down the rates to a more reasonable level. I did it, and so can you.
Order a credit report. The interest rate on any type of consumer loan is tied in to our credit history. While most of us have a pretty good idea of where our credit stands, ordering a copy of our credit report will identify problems we don't know about such as old debts, errors, or fraudulent activity. These issues must be addressed first.
Improve your credit score. It isn't just late payments or old unpaid debts that can lower a credit score, carrying too much debt or owning too many credit cards will also lower a credit score. Improving your credit score means cleaning up your existing credit.
-- Avoid late payments on all your consumer debt.
-- Don't open any new cards during this period, so matter how enticing the offer.
-- Pay your debt down instead of shifting the debt around to other cards.
-- Accelerate payments on credit cards that exceed 35% of your available credit line. For example, on a card with a $10,000 credit line, pay down the balance to $3,500 or below.
-- Do not close unused cards or cards that have been paid off.
Watch for promotional deals. After six months or so, watch the credit card promotions in the mail. As your credit improves, the type of credit card offers improve as well. Wait until your mailbox is consistently flooded with intro rates of 0% and 8-10% fixed rates before making your move.
Call your lender. In most cases, negotiating a lower rate is a easy as calling your lender and asking for their advertised low rate. And if they balk? It's OK to tell them that if they won't drop the interest rates, you'll be transferring the balance elsewhere and then.... do it. Out of the five companies I called, four of them dropped their interest rates anywhere from 3-6%. The one who balked saw my business vanish, which was a foolish move on their part.
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