You know what they say: you have to spend money to make money. And during these times, when the average Canadian household is drowning in debt, that often means you have to rely on your good ol' credit card just to get by.
Unfortunately, that comes at a price. Credit card interest drains you of your hard-earned money. The $10 you've spent on burger and fries could quickly double if it's left to linger on your credit balance. And as you spiral further down into a financial hole, the debt just keeps on piling higher.
But don't worry. We're here to offer you some financial tips to help cut your credit card interest rates and, by extension, help with any debt that's weighing you down.
Make Timely Payments
This one may be a bit obvious, but it's always an important point to go over when it comes to discussing interest rates. Really, it's the most valuable financial tip of all!
When you make overdue payments frequently, it's common for the creditors to increase your interest rate in response. Think of it as their way of sending a warning signal. If you strive to make payments on time for a few months, they're required to drop it back down. So try to pay off your credit card balance in full each month. Promptness is really important here! Even being a day off with your payment could do terrible things to your credit score and your interest rates.
But of course, that's easier said than done. If you can't pay your balance in full, try to pay a tiny bit more than the minimum balance due. Poor credit performance won't haunt you forever.
Out With Your Store Credit Cards
Let's be honest, making minimum payments can be a challenge too. But there are other changes you can make to improve your interest rates. For one, if you own a department store credit card, perhaps it's time to make a change.
While they lack flexibility, they're very easy for people with low credit scores to obtain. And of course, there are special benefits, such as bonus discounts, free shipping and other financial offers exclusive to their shoppers. That's a big incentive for many people to pick them up.
But in reality, all it gives is a reason to justify extra spending. You could easily rack up a shocking bill that you can't pay off, which really negates the whole point of the rewards/discounts you think you earned.
And guess what? Store cards usually come with a whopping average interest rate from 25% to 30%!
Transfer Your Balance For A Lower Interest Rate
Consider making a transfer to a lower interest card with a bank. It's okay if you have bad credit! According to lifeoncredit.ca, the No-Fee Scotiabank Value Visa Card, for one, is available to everyone--including people with bad credit. It offers lots of useful benefits such as card protection and itemized transactions. And best of all, its introductory rate of 3.99% applies to balance transfers and cash advances as well.
Some banks even offer 0% introductory interest rates for a year, which is a useful short-term bridge to help with debt. During that time, you could save hundreds of dollars and focus your attention on paying back what you owe.
But let's say you like your current credit card company. Their associated card's the oldest piece of plastic in your wallet and they've been with you through the fire and the flames.
We get it. Not to worry; there's yet another way!
Negotiate A Lower Rate
Sometimes, all you have to do is ask. It's very possible to significantly lower your interest rate by calling the number on the back of your card.
But of course, it's not as simple as it sounds. Your bank's representatives probably heard every story in the book. But, as the great Lloyd Christmas once said - we're saying there's a chance.
Put your research to use
There may be better deals with competing credit card companies that offer lower interest rates than the ones you have. Look around and write them down on a sheet of paper!
Why, you ask? Representatives will be more inclined to listen to you if you have some leverage. Imply you'll take your business elsewhere if they don't match the competition's interest rates. In the end, they're a business; they'd hate to lose a long-time customer to a local competitor. Even if you're late to the payment party every month, negotiation is still possible! Just follow these few tips:
Be firm, yet polite – You want lower interest rates, and that's what you're going to get. But don't forget the person on the other line is human. Being confident is one thing, but being full of attitude is another.
Persist - If one representative fails to assist you, try another. Better yet, ask for the manager. Don't be discouraged if you're rejected a couple of times! This is one of the few times when 'no' doesn’t mean 'no'. Touching base won't be as hard as you think.
As bleak as things may be, just remember there's always hope. Whether it's through negotiating or transferring, reducing your interest rate is very possible.
But don't assume that the struggle ends there. You should always keep a careful watch over your personal finances to keep those rates low. Luckily, with today's booming mobile app market, that's very easy to manage. Try fiddling with Mint Bills (formerly known as Check) and Monefy for the Android/iOS. Both of them are award-winning apps that really help you track, budget and manage your money in a really intuitive fashion. And these are just few of the many helpful things that could come up with a bit of snooping around on the web.
These are just some of many financial tips out there, so do your research and be smart with your money!
If you've run out of options and are really struggling to make ends meet, Magical Credit may be able to assist you with a short-term loan between $2,000-$10,000, providing you are a Canadian with a steady income.
To see if you qualify, call us today at 1 (877) 213 2088 or fill out an application to get started.