Credit cards are convenient and can be an extremely useful tool. However, they may be accompanied by high interest rates, which could cost you hundreds or even thousands of dollars over time. You couldn’t possibly find a better way to spend that money, could you? Fortunately, there are ways to avoid credit interest rates, so you won’t be wasting your money!
1. Pay the card’s full balance every pay period.
This is the simplest and most reliable method of avoiding interest. After all, if you don’t have a balance, you can’t be charged interest! Pay the full amount owed on the card at the end of each pay period, which is usually one month. You will earn exactly zero interest this way.
Making partial or minimum payments is an option. You’ll avoid late fees, but interest will accrue if you don’t pay off the entire balance of the card.
In rare cases, a credit card may not have a payment grace period, which means you must pay immediately to avoid interest. Always read the fine print on your card to determine the length of the grace period.
2. Take care of the bill after every purchase.
This requires some self-control, but you will undoubtedly avoid interest. It’s essentially a more extreme method of maintaining your balance. Pay a purchase as soon as it appears on your credit card statement. This is much easier with online banking because you can simply make a quick transfer to pay the bill.
When you make a purchase, most credit cards will send you an alert. This is a friendly reminder to send in your payment.
You may also be able to set up a daily automatic transfer to keep your balance at zero.
3. Keep track of your payment dates to avoid penalty fees.
If you fail to make a payment, you will be charged a penalty APR. This is a higher interest rate than your standard APR and could last up to 6 months. The best way to avoid this is to pay your bills on time each pay period. Keep track of your bills to avoid late fees and penalty interest.
You could set up automatic payments to transfer the amount owed at the end of each pay period. You won’t have to remember the payment date this way.
Even if you are unable to pay the bill in full, pay the bare minimum. You will earn interest, but it will be far less than the penalty rate.
If you receive a penalty APR and have good credit, contact your creditor. If you have a good credit history, you may be able to negotiate a lower APR or have the penalty waived.
4. Transfer your debt to a card with an introductory 0% APR.
When you sign up for some credit cards, you may be eligible for a period of interest-free credit. This period is usually 12-18 months, but it varies according to the card. You can then transfer any balances from other credit cards to this card and pay them off without incurring interest.
Remember that the introductory period will end at some point, and if your balance isn’t paid off by then, you’ll be hit with a high-interest payment. If you can’t pay off the card during the introductory period, transfer the balance to another card with a 0% APR.
To get out of debt, use this as a last resort. If you open multiple credit cards in a short period of time, your credit score will suffer.
5. Get loans for large purchases instead of using your card.
Putting large purchases on your card may result in increased interest payments. Automobiles, furniture, home repairs, and a variety of other high-priced items can end up costing you hundreds or thousands of dollars in interest. Set up a payment plan with the seller or business if possible, rather than charging the purchase to your credit card. This avoids the card and any interest you may have accrued.
Medical expenses are a prime example. They’re usually quite pricey, but most medical billers are willing to work with you on a payment plan. You can avoid putting anything on your card this way.
Keep in mind that these payment plans may have their own interest rates. Don’t take out loans with interest rates you can’t afford.
6. Request a lower interest rate if you have a good credit history.
This will not eliminate interest, but it may significantly reduce it. If you have a good credit history with them, some credit agencies are willing to work with you. In light of your good credit, contact your creditor and request that your APR be reduced. If you use your card frequently, this could result in significant savings.
Saying you’ll cancel your card and go to another company that will work with you is one negotiating tactic. Instead of losing your business, the company will most likely be willing to reduce their own rate.
7. Find a new, low-interest card if you need to carry some debt.
There are numerous credit card companies vying for your business. To attract customers, some of them offer lower interest rates than their competitors. Look around to see if there are any cards with lower interest rates than the one you’re currently using. As a new customer, you might be able to get a good deal.
Always read the fine print to determine whether the APR is permanent or just an introductory rate. You don’t want to be caught off guard when the introductory period ends and the interest rate suddenly rises.
8. Avoid cash advances if you can.
Cash advances allow you to withdraw funds from your credit line. The catch is that interest rates are extremely high, frequently exceeding 20%. Unless it’s an emergency and you need the money right away, it’s best to avoid cash advances.
If you can repay the advance within a few days, you may be able to avoid the high fees. If not, it’s best to avoid them.
9. Follow a budget so you don’t accidentally overspend.
If you’re not careful, it’s easy to overspend. As a result, creating and adhering to a budget is your best bet for avoiding debt and interest. Decide how much you can spend each month and then save the rest. That way, if an emergency or unexpected expense arises, you will be able to pay it off without relying on credit cards.
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