Cutting Credit Card Costs

What are the APRs charged by the credit cards in your wallet? If you are paying more than 12% interest on any of them, you are probably paying too much. The prime rate is currently in the single digits, so credit card companies that charge above 13% APR are overcharging. If you have good credit, you should be able to find a credit card with an APR below 12%. Shop around and get the rate you deserve. Do not be afraid of asking for a lower rate on your current credit card if you think you deserve it. A lower interest rate can cut your credit card costs significantly.

Another action you can take to save money is transferring your outstanding balances to a credit card with a low APR. Many credit card companies offer low APRs on balance transfers, and taking advantage of those offers can save you a lot of money. You need to make sure, however, that the special balance transfer rate is not temporary. Otherwise, you will need to transfer your balance again once the offer expires. You also need to find out if either credit card charges a fee for transferring a balance. The fee might be higher than the money you will save from the lower APR.

Some credit card companies issue fees simply for holding their credit card, even if you do not have an outstanding balance (these are called inactivity fees). Close any accounts that currently charge you an annual fee. There are plenty of credit card companies out there that offer their services for free. Make sure to allow about one month between each credit card cancellation in order to prevent your credit score from dropping. Ask the credit card customer service employee to note on your credit report that the account was closed per customer's request.

You also might want to consider paying your credit card debt with part of your savings. These days, banks only reward your savings account with less than or up to 1.5%, while your credit card charges you up to 21% in interest, so you will actually save more money by using your savings to pay your credit card than by leaving it in the savings account. If this is an option you are willing to consider, make certain that you do not drain your savings completely. It is recommended to maintain at least 3 to 6 months of income in your savings account in case of an emergency.

Now that you are aware of which of your credit cards carry the highest interest rates, pay the most you can afford to those cards and pay a bit more than the minimum payment on ones that carry the lowest interest rates. Once you finish paying off the card with the highest interest rate, move on to the next highest, and so on until you pay off all your credit cards. This strategy will assist you in getting rid of the credit cards with the highest interest rates first, and leave you to handle the ones that do not charge you as much. You should discipline yourself to always pay more than the minimum required payment on any credit card. This can significantly reduce the time you spend in debt and the money you will pay in interest charges.

Remember to always manage your credit card spending and do not over spend. It could end up costing you much more than you bargained for.

The subject matter contained in our educational publications is for informational purposes only. We suggest that you consult your financial or other advisors when planning for your specific needs or requirements.

Ana Ribero is a Certified Financial Counselor for Debt Management Credit Counseling Corp., a 501(c)(3) not-for-profit credit counseling organization.

---

Credit Cards: How To Use Them

Credit cards can be a very quick way of getting... Read More

Understanding Your Credit Score

When you apply for credit one of the first things... Read More

Useful Tips When Choosing Credit Cards

Chances are you have received your share of "pre-approved" credit... Read More

Credit Card Balance Transfers Explained

What is a balance transfer ? A balance transfer can... Read More

Identity Theft ? Monitor Your Credit Report

The recent security breach at credit card processor CardSystems Solutions... Read More

Beware of Falling Minimum Payments

If you opened a credit card statement recently and were... Read More

Credit Card Tips

Here are some useful credit card tips for you to... Read More

Establishing Credit ? What You Need To Know Part 1

Establishing credit is one of the most important things you... Read More

Like It Or Not, You Have A Score To Settle!

Like It Or Not, You Have A Score To Settle!... Read More

What is a Credit Card?

A credit card allows you to buy things even though... Read More

Identity Theft - How to Protect Yourself

"Like the tan? I got tons of sun on that... Read More

5 Killer Steps to avoid Credit Card SCAMS!

In August, 2004, the Federal Trade Commission issued their findings... Read More

Types of Credit Cards

There are a whole variety of different types of credit... Read More

What Happens When Your Credit Is Damaged? Do You Have Recourse?

The good thing about bad credit is that you can... Read More

Trade Credit: How to Determine if You Should Offer Net-30 Terms to Your Customers

What is trade credit?One of the major differences between consumer... Read More

My Credit Card Application Was Rejected! Now What?!?

No doubt, you've probably gotten literally hundreds of credit card... Read More

Balance Transfers Introduction

Credit card balance transfer involves using a credit... Read More

Have You Checked Your Permanent Record Lately?

As a young student I feared getting bad grades because... Read More

Credit Card Security Advice

Which of the following is the biggest threat to your... Read More

10 Step Credit Repair Guide

The process of clearing credit can be laborious and frustrating,... Read More

Credit Card Rates - Negotiating Rates with Your Credit Card Company

Ok, let's face it, everybody hates high credit card rates,... Read More

Which Credit Card?

Bewildered by the sheer variety of debit cards and credit... Read More

What is on Your Credit Report?

Your credit report is a very important piece of the... Read More

Avoiding ID Theft and Credit Fraud

Article excerpted from the new book, "How to Do Space... Read More

How To Eliminate Credit Card Debt

There is almost nothing more troublesome than having too much... Read More

3 Free Credit Reports For You

If you were to tell someone that they can have... Read More

Credit Card Benefits and Drawbacks

Credit cards have both benefits and drawbacks. It is wise... Read More

What You Need to Know about Debt Negotiation on Credit Cards

Debt negotiation on credit cards is often referred to as... Read More

Do You Know The Top Five Credit Card Mistakes?

When you're dealing with credit cards, you're playing with fire.... Read More

Identity Theft - Dont Think You Are Immune

As identity theft becomes more prevalent, the need to regularly... Read More

Credit Help for Real Estate Financing: Credit Scores

When you buy real estate, lenders run all of the... Read More

Bad Checks, Bounced Checks, & NSF Checks

Negotiable instruments like checks and drafts have become an indispensable... Read More

Credit Counseling: Is it Really Necessary?

Not everyone has a positive experience with credit counseling. Potential... Read More