Originally posted on https://saveyourdollars.com/avoid-credit-card-interest-with-these-8-simple-tips/
Are you currently paying interest on your credit cards?
If so, it’s time to explore other options. Credit card interest is more than just annoying, it can end up costing you thousands of dollars more than your balance on your credit card.
The average credit card debt that Americans carry is increasing over time, so more and more of us are having to deal with high interest rates. There are ways to avoid credit card interest and paying off your credit cards doesn’t have to be a major headache.
Why Not Pay Interest?
If credit cards seem like a foreign language to you, you may not understand why paying interest on a credit card is bad in the first place. When you’re paying interest, you’re essentially paying strictly for the convenience of being able to pay off your bill over time, rather than a giant lump sum up front.
Another issue with credit card interest is that interest rates are often extremely high, and they can change over time. If you’re only paying the minimum amount on your credit card every month, it could take you decades to pay it off in full. This adds up to a massive amount of money over time. This is money that you could be saving, investing or just using in smarter ways.
So the best way to save yourself tons of cash is to pay off your credit cards as soon as possible to avoid credit card interest altogether.
How To Avoid Credit Card Interest
Credit card interest is a pain, but if you’re smart you can enjoy all of the benefits of using credit cards without any of the pitfalls. Here are 8 simple ways to avoid credit card interest:
1. Pay on Time
The first way to avoid credit card interest is to simply always pay off your credit card balance. This might sound obvious, but some people don’t realize the harm of carrying a high credit card balance. This can ruin your credit score, and that’s just the beginning.
Make an effort to never charge on your credit cards what you can’t afford in real life. That way you’re always able to pay off the balance when your monthly payment time rolls around. Many Americans are living above their means by charging things to a credit card and worrying about how to pay it off later.
Of course, life isn’t always perfect. Sometimes emergencies come up that must be put on a credit card and paid off later. This is fine to do, just make sure this doesn’t become a bad habit.
2. Read the Fine Print
Before you sign up for a credit card, make sure you read all of the fine print. A lot of people skim over this information, but it’s critical to make sure you understand exactly what you’re getting yourself into.
What’s your interest rate? When will your payment be due? How long until you start paying interest? Does the company have a grace period? These are all things you should know before you apply for the card.
3. Avoid Promo Credit Cards
A lot of credit card issuers use great marketing campaigns and buzzwords in order to get you to sign up. Many of them promise cash back, zero percent interest and other perks to help lure you in.
These perks can be great for short term, but these cards often come with extremely high interest rates once the promotional period expires. If you choose one of these cards, make sure you’re still paying off your balance even if interest isn’t collecting at the time.
4. Choose the Right Card
Choosing the right credit card is a personal decision. As we discussed earlier, you should never be swayed by promotions or good marketing.
When you’re choosing your next credit card, make sure you put in the time and research what the best option. Try to invest in a card that has good perks, rather than going for a department store card or something such as that. It’s a good idea to meet with a financial advisor or someone at your bank in order to help you make a fully educated decision.
5. Pay the Balance on a New Card
Transferring your credit card balance to a new card is an option if you’re already in debt and need more time to make payments on your card. This means that you apply for another credit card and pay off the balance of one card onto the other card. You should choose a card that has a lower interest rate, or one that gives you a period of time interest-free so you can pay off the balance during that time.
6. Take Out a Personal Loan
Another option is taking out a personal loan from your bank, and using that to pay off the balance of your credit card. The principle here is similar to transferring the balance. You’ll hopefully be able to receive a personal loan at a lower interest rate, which will save you more money over time.
7. Negotiate with the Credit Card Issuer
Many people aren’t aware of this fact, but it is possible to negotiate with your bank or credit card issuer to try and lower your interest rate, monthly payment or even your balance.
This method isn’t easy, but it could be an option for you if your monthly payments are crippling, and there is no sign of you being able to pay off your debt anytime soon. If this sounds like your situation, give your card issuer a call to discuss your payment options.
8. Stop Using Your High-Interest Credit Cards
If you currently have a balance on a high-interest credit card, the best thing you can do for yourself is to stop using it completely. The more money you rack up on it, or the closer you get to maxing it out, the more you’ll end up paying in the long run.
Cut up your credit cards and try your best not to charge anything else, and pay more than the monthly payment. Building good financial habits doesn’t happen overnight, but you’ll be glad you did in the long run.
Want to Learn More?
How to avoid credit card interest is important, but it’s certainly not the only thing you should know about your line of credit. Research and education are key when it comes to maintaining financial health.
Check out the rest of our blog for more information on personal-finance related topics. We have articles that cover every aspect of your financial life from spending, saving, investing and simply overall management of your money.