Credit card interest is one of the biggest expenses of having a credit card. Every month that you don’t pay your credit card balance in full, your card issuer will add a finance charge based on your interest rate and credit card balance. The higher your rate and your balance, the higher your finance charge will be.
Unfortunately, high finance charges can make it more difficult to pay off your balance, especially if you typically pay only the minimum, because so much of your monthly payment goes toward paying off interest rather than your credit card balance. Here are some ways you can save money on credit card interest, and hopefully, pay off your balance quicker in the process.
Call and ask for a lower interest rate.
If you’ve kept your account in good standing and you have a good credit history, your credit card issuer may be willing to lower your interest rate, especially if it means keeping your business. Give your card issuer a quick call to negotiate a lower interest rate.
Take advantage of a 0% balance transfer deal.
Transferring your balance to a credit card with a 0% promotional rate will give you several months of interest free payments. Pay off your balance within the interest-free period and you completely ditch interest all together.
Pay more on your credit card each month.
Since the interest you pay is based on your credit card balance, you can reduce the amount of interest you pay by paying off your balance faster. Instead of paying the minimum, double or triple your payment. The interest you pay each month will be much lower than if you made only the minimum payment.
Make your payment earlier in the billing cycle.
Many credit cards calculate interest based on the average of your daily balance throughout the billing cycle. Having a lower balance for more days in the billing cycle can result in a lower interest charge. So, making your payment earlier rather than later in the billing cycle can lower your finance charge for that month.
Keep just one type of balance on your credit card.
When you have balances on the same card with different interest rates, your credit card issuer is only required to apply above-minimum payment to the balance with the highest interest rate. If you only pay the minimum, it will likely be applied to the lower interest rate balance while the higher rate balance accumulates finance charges.