You’re shopping on Amazon, and you find exactly what you’re looking for from two different sellers. One is selling it for twice the price of the other – the exact same item. Which do you purchase?
This may seem like a no-brainer, but when it comes to credit cards and interest rates, a lot of people choose the more expensive item for no real reason at all. Not shopping around and using the tactics below to get the lowest credit card interest rate available to you is like buying the more expensive item on Amazon, even though the half price one is just as good. Except with credit cards, you’re paying double every single month.
And often times, you really are paying double. There are plenty of credit cards out there with a 20%+ APR, even though a decent credit score could easily snag you a credit card with an APR of 10% or even less.
Whether you chose your credit card because you like the brand, it has good rewards, or you’re already banking with them, it’s important to have the lowest interest rate possible, especially if you’re going to be carrying a balance. You might not even need to get a new card.
Here are our top tips for snagging yourself a lower credit card interest rate and saving big.
The easiest way to get a lower interest rate is to negotiate with your current credit card issuer. All it takes is a simple phone call, so everyone should try this.
You will likely need to have a history of on-time payments (even one missed payment will make it hard to bargain) as well as a good credit score. Call up your credit card issuer and cite your payment history and credit score, asking if they would be willing to decrease your interest rate.
If they say no, tell them you’re considering closing your account with them. This doesn’t always work, but it’s a great bargaining tool for getting lower interest rates or no annual fees. You’ll likely be transferred to another person, and although they won’t tell you, this person probably works in retentions. Their job is to keep customers from cancelling their accounts.
Now, you have to be ready to close your account in order for this to work, but if you’re paying a high interest rate, that’s probably for the best anyway. Once you’ve been transferred, mention once again your payment history and great credit score, and tell them that you want to close your account because of the high interest rates. Be sure to mention that once you do, you’ll be opening an account with a competing credit card company and transferring your balance. Ask them if there’s any way to get a lower interest rate.
If that doesn’t work, you can ask if they have any other cards with lower interest rates. If you are really considering transferring your balance, you’ll want to ask about any balance transfer fees on those cards as well.
Get a low interest credit card
If the bank won’t budge, it may be time to close your account and get a better credit card.
You’ll probably want to avoid any credit cards that offer rewards. While these are great ways to build up points and miles, they generally have higher APRs. The lowest APR credit cards will usually have little to no rewards system. You can still use your airline and hotel credit cards, but never carry a balance on them.
Credit unions are great places to look for low interest credit cards. Credit unions are actually not-for-profit, so any profit they make is passed back to members in the form of lower interest rates and fees. They do typically offer lower credit limits, but as long as you don’t need a huge limit, credit union credit cards are a great deal.
Many credit unions have requirements for being a member, but they’re usually pretty easy to meet. They might require paying a $5 annual fee or living within a certain jurisdiction. Look up credit unions in your area, find a handful with good ratings, and look into their member requirements. Another good way to find a credit union is to ask around with friends and family. Often times you just have to have someone to refer you in order to join.
Get a 0% APR credit card
Depending on your credit card needs, the wisest choice might be to get a credit card with a 0% promotional APR. These cards come in two forms: 0% promotional APR on purchases, and 0% promotional APR on balance transfers. Promotional periods can last anywhere from a few months to a year, and some even last as long as 15 or 18 months. And no, you don’t have to pay any credit card interest.
The first is a great option if you have a big purchase coming up that you know you won’t be able to pay off in one month, but can definitely pay off within the promotional period. For example, perhaps you have a huge issue with your car, and the mechanic tells you it’s going to cost you $2,000. You can only afford to pay $500 now, and then another $500 each month. Instead of putting it on a high interest credit card, get a credit card with a 0% promotional APR on purchases that lasts at least 5 months. Then, you can pay off the cost of your car repairs in 4 months without owing a penny in interest.
The second is a great option if you’re already carrying a large balance on your credit card and won’t be able to pay it off for at least a few months. It’s worth noting that most credit cards will charge a balance transfer fee of at least 3%. However, if it’s going to take you at least 6 months to pay off your balance, transferring to a 0% APR card will save you more than the cost of the balance transfer fee. You’ll be able to double down on your debt payments with no interest racking up. The Chase Slate is one of the best balance transfer cards, with a promotional period of 15 months. Just make sure you can finish paying off your debt before the 15 months is up, or you’ll get slapped with a massive APR that ends up costing you more than you saved.
Whichever route your go, these are very easy ways to save a lot of money. Even if you don’t carry a balance on your credit card (good for you!), it’s never a bad idea to have a lower APR in case of financial emergencies.