Credit card is very convenient. Easy to use. But credit card debt is more likely to increase. If you not manage properly, credit card usage become a tragedy.This article explain how to reduce credit card interest rate in 6 successful ways.
How to reduce credit card interest rate ?
Getting out of this liability is not only easy but also very expensive. In case of credit card trapping, you have to pay interest of 36-48%. Here are 6 ways to reduce your credit card interest.
Repay the money on time.
Repay the money used on your credit card within the stated time. We have to pay 5% of the used amount as a minimum amount. The balance can be carried over to the next month. Unless you pay only the minimum amount and add the remaining amount to the next month’s credit, you are heading towards greater liability. If you do not pay within the due date, you will be charged a late fine along with interest and taxes.
Do: Try to pay the entire amount within the due day. Carry-over: Make new purchases only after the liability is exhausted.
There is no interest in Free Period.
Typically, new credit purchases have an interest-free period. The new purchases are for 40-45 days with interest-free days. This facility is available only to those who repay it properly. Carrying over the amount for the next month will result in the loss of the interest-free period of the month.
Do: Carry-over for the next month only if the credit is not fulfilled. Credit cards can only be used for new purchases after the amount has been paid in full. Take advantage of Interest Free Days.
Balance Transfer.
In times of stress, money may not be repaid on a credit card. After paying the minimum balance, the remaining amount will be charged an additional 3–4% interest on the carry over for the next month. Here you can take advantage of the balance transfer facility. This facility is available for those who use multiple credit cards.
What to do: Once the card limit has reached the Balance Transfer (BT) utility limit, the amount can be transferred to your next account. When utilizing this facility, interest rates would be only about 1-1.77%. Some companies charge a 1% processing fee for the BT facility. Some cards also have Zero Interest BT facility.
If the balance is transferred, the amount should be repaid in due time. If you use BT regularly or the amount is not repaid or the payment is too high, the credit score will decrease.
Switch to EMI.
Use the facility to pay monthly EMI instead of paying back when you buy. Then there will be a significant reduction in interest rates. It is 14-24% more than the interest paid together.
Do: There are two types of EMI conversion facilities. EMI facility provided by merchants when purchasing goods. The second is the EMI facility offered by credit card companies when making large-scale purchases. This is known as EMI On Call.
There is no reward point when taking an EMI system. Also know if there is a processing charge. There is no standard processing fee for EMI facility provided by merchants. Credit card companies may charge processing fees.
Avoid withdrawal of cash through ATMs.
Avoid the possibility of withdrawing cash via ATM using a credit card. If you withdraw the money, pay back as soon as possible. Free interest rate days are not available for cash withdrawals through ATMs. Interest will is charged from the day the money is withdrawn.
Do: Pay back as soon as you can with the money. Avoid high interest rates.
Do not use credit card abroad.
Currency transfers overseas using credit cards are easy but very expensive. Conversion charges will be charged if credit card is used for currency exchange. 3-5% interest is payable. If you use an ATM overseas, you will be charged.
Do-It-Yourself Ability to use credit cards when traveling abroad. Use the Forex Card for travel. This will save you from additional interest rates.
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