This blog post was written by SAC member, Meadow Hall
If you aren’t paying your credit card off in total every month, then you most likely are paying interest on the balance that is carrying over. Your annual percentage rate (APR) is the interest you have to pay on that balance. If you have a higher APR, then more of the money you pay every month will go towards the interest that has accrued rather than your principal balance. Fortunately, there are ways to lower your interest rate.
Ask For a Rate Adjustment
You can contact your credit card company and ask for a rate adjustment. Asking for a reduction is going to be more successful with credit cards that you’ve had the longest. If you have increased your credit score from the time you first signed up for the credit card, then you may be more likely to be granted a rate reduction. If you currently have a low credit score, you can still work towards increasing your score and then ask for a rate adjustment later.
Ask For a Temporary Adjustment
If the credit card company isn’t able to reduce your rate permanently, you may be able to request a temporary reduction. For example, you can ask for a reduction lasting 1 year or 6 months. They may be more likely to agree to this adjustment, especially if your credit score has recently increased.
Change Credit Cards
If the credit card company is unable to reduce your rate, then it may be time to switch to a new company altogether. When looking for a new credit card, look for ones compatible with your credit score and that have a low APR. Opening a new credit account can lower your credit score in the short term but have little effect in the long term. If you switch cards within the same company, you may not even have to open a new account. Some companies allow the old account to carry over to a new credit card.
As an HUECU member you have access to free credit counseling through GreenPath Financial Wellness. Contact GreenPath to learn more about potential impacts of opening a new credit card or closing an old account.
Research Debt Consolidation Loans
Before switching credit cards, you may want to research debt consolidation loans. If you are paying a significant amount in interest every month, you may benefit from transferring the credit card debt to a debt consolidation loan. Learn more about debt consolidation loans here.