CardRates.com Guide: Low APR
A low credit card APR is a valuable commodity if you ever carry a balance. The higher your interest rate, the more you’ll have to pay back on top of your balance. An increase of just a few percentage points makes a huge difference over how much money you’ll pay over the course of a year. Follow these steps to maintain your low credit card APR.
1. Always pay your bill on time
Fortunately, the CARD Act of 2009 makes it much more difficult for credit card issuers to give consumers penalty rates. However, if you have a delinquency on your credit card of 60 days or more (meaning you’ve missed at least two payments), you may trigger a penalty rate. This means the credit card company can increase your rate on your existing balance, and they aren’t required to lower it until you regularly pay your bill on time for the next six months.
Always pay your bill on time. Set up reminders in your calendar if you have trouble remembering due dates. If your minimum payments are too high, call your credit company and ask if you can make other arrangements — before you get in trouble and find yourself with a higher interest rate (and a balance that grows more quickly).
2. Negotiate your interest rate
Believe it or not, some credit card companies will lower your APR upon your request. Call your credit company, sell yourself as a good customer and remind them how many years you’ve been banking with them. Let them know about competing credit card offers from other banks with much lower APRs. Mention how you’d like to stay loyal to them and ask for a lower APR.
If they say no or do not offer a low enough rate, ask to speak to a supervisor or someone in the retention department. No luck? You may want to try calling again a few days later and see if a different representative can help.
3. Transfer your balance
If you cannot get your credit card company to agree to lower your APR despite your best efforts, and your current interest rate is unmanageable, your best option is to transfer your balance to a card with a lower interest rate. To stay competitive, many banks offer great introductory offers of 0% on balance transfers for a year or longer. Just read the fine print so you know what interest rate to expect once the introductory period ends. If it’s higher than your current rate, it may not be a great deal unless you make major progress on your balance during the 0% introductory period.
4. Avoid variable rates
When you have a variable rate on your credit card, it is tied to an index (like the prime rate). As the market fluctuates, your rate can, too. Avoid this by getting a credit card with a fixed rate so you will always know what your rate will be. The only problem? Fixed rate credit cards are harder to find since the CARD Act went into effect.
Maintaining a low credit card APR is easy if you follow some basic steps.
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