How to Lower Your APR
Give your debt repayment a head start with these steps for lowering your APR.
Once upon a time, before the credit crisis, many people could reduce their APRs by simply calling and asking their credit card company for lower interest rates. That’s still the case these days, with banks taking higher precautions to ensure loans and credit lines are repaid in a responsible and timely manner. If you’re paying more interest on your credit card than you can pay off, you may want to look into how to lower your APR. With the steps below, you can take a responsible stand against debt and hopefully lower your APR in the process.
Pay off debt faster with a balance transfer.
Step 1. Find Out How Much Interest You Are Paying
Surprisingly enough, some people blindly pay their credit card statement each month, without so much as glancing at their APR. Your balance transfer introductory rate may have expired and a higher standard APR might apply to the balance now, so it’s always best to check how much you are paying. Always know when your introductory APR ends.
Step 2. Compare Your APR to the National Average
How do you know you have an unusually high APR unless you can compare it to another? You can find the latest credit card rates from the U.S. Federal Reserve, as well as credit card comparison websites. Once you’ve compared your APR to the national average, you will have a better idea of where you stand.
Step 3. Shop Around
Now is the time to shop around for a low or 0% introductory APR card. Sometimes your credit card company may be offering much lower rates on your credit card to new customers. This information is imperative for negotiating your APR or deciding if another course of action is necessary. If you’re planning a balance transfer, look for credit cards with 0% introductory APR on balance transfers and use balance transfer calculators to decide just how much you can save, taking into account the interest rate of the offer as well as on your existing balance, the duration of the offer, and the balance transfer fee.
Step 4. Consider a Balance Transfer
If you can’t get a lower APR by just asking for it, you may need to take other steps to ensure you aren’t tacking on more debt with each passing day. Balance transfers are a great way to get a fresh start on your credit repayment. Look for an offer with a very low or 0% promotional APR and see if that card accepts balance transfers. Some balance transfers come with a percentage fee on the amount you are transferring, but you can often get a 0% promotional APR on your balance transfer for a certain duration. Ideally, you want to make sure your balance transfer will help you to pay off your debt, not just shuffle it to another credit card.
Step 5. Repay Balance Quickly
Now that you have a new beginning to repay your credit card balance, you should take all steps necessary to ensure that you pay it within the introductory period. If you continue paying the minimum payment each month, eventually the introductory APR period will end and you will be repaying your balance on a higher interest rate. Make a plan to repay quickly.
By taking these steps to lower your APR, you can lower your debt more quickly and responsibly. Going forward, devise a budget or consider a debt management plan. Many credit card companies will work alongside of you to restructure your debt if you are having challenges making your payments.
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