Credit card debt can be crippling to your financial well-being, and once you’ve found a great balance, it can seem like there’s no way out. If you’ve ever felt that way, you’re not alone.
On average, Americans are diagnosed with credit cards according to a report by Experian. Especially some areas southern states, bear a higher average debt burden than others. With average interest rates hovering around 17%, low minimum payments and no fixed repayment term, it can take decades for such a balance to bear fruit.
Call your credit card company
While you may not be able to get a permanent cut in your credit card interest this way, you may be able to temporarily negotiate a lower rate. This can be useful if you only want to pay something off. vacation debt.
Start by politely explaining why you are asking for a lower interest rate. If you’ve always made your payments on time, point out your history as a good customer. It can also help if your income has increased or your credit score has improved since you first opened the account.
If you don’t get what you ask for, stay polite. But don’t be afraid to call again and speak to another agent.
2. Apply for a low-interest credit card
Some credit unions and even banks offer single-digit credit card interest rates. These low interest credit cards allow you to transfer your balance and take advantage of the lower rate on your current debt, as well as any new charges you incur on the account.
Contact your local credit unions and community credit card comparison banks so you can find the best solution for you. Keep in mind that low interest credit cards often require excellent credit, which typically means a FICO credit score in the high 700s.
3. Apply for a credit card for balance transfer
Balance transfer credit cards offer introductory low or 0 percent APR promotions, which can last anywhere from six to 21 months. That can give you precious time to make a huge dent in your debt.
However, keep in mind that most balance transfer credit cards charge an upfront balance transfer fee, which is typically 3 to 5 percent of the transfer amount. You can also generally expect a high interest rate after the promotion period has ended.
Balance transfer credit cards are typically available to those with good credit or better, meaning a FICO score of at least 670. If you’re considering one, use one interest calculator to get an idea of what you are saving.
Improve your credit
If you don’t currently qualify for a low interest or balance transfer credit card, take the time to improve your credit. Ways to do this include:
Get caught up in arrears and keep paying on time.
Pay off credit card balances.
Asking a family member with great credit to add you to their credit card account as an authorized user.
Avoid new debt unless absolutely necessary.
With these and others tips for credit improvement, you may soon be eligible for a better credit card rate.
Get a debt management plan
If your credit card debt is dire, it may be wise to enlist the help of a credit counselor, who can help you set up a debt management plan. With this plan, you pay a monthly payment to the credit consultancy, which then distributes it and pays your creditors on your behalf.
Credit consultancies may also be able to negotiate lower interest rates and payments for you.
The catch is that you may have to close your credit card accounts, which can take a toll on your credit score. Debt management plans typically come with a small monthly fee, so it’s best only consider one if you don’t have many other options.