The Finance Blogger


Lowering Interest Rates on Credit Cards

lowering interest rates on credit cardsThere is always talk by the politicians about lowering interest rates on credit cards, however the reality is that credit card interest rates are never going to be lowered unless there is some competitive pressure for rates to come down. In fact over the last 5 years, regular interest rates for investments and the best lending rates have been at historic lows. During this time frame, credit card rates have not budged. Sure there are some credit card products that offer low rates for 6 months on balance transfers, but then the regular credit card rates will kick in on any unpaid balance that is on the account.

The politicians make a lot of noise about placing pressure on the credit card companies, but that is all it is, just noise. They are just trying to look like they are doing something for the consumer and when they have received the publicity they are after, they quietly move on to other topics that are more news worthy. In actual fact they never had any intention of doing anything to lower credit card rates at all. They know this and the credit card companies know this. They cannot or will not really do anything about it for a variety of reasons we will not go into here.

There are also some credit card products that do offer lower interest rates, however there is usually an annual fee that is charged in conjunction with these credit cards, which brings the effective rate right back to the same rate or in some cases higher than a regular card with no monthly fee. Consumers should really do the math on these cards before they apply for and sign up for a new credit card. If you really do use your credit card a great deal and use some of the benefits that it provides, then maybe paying an an annual fee will be worth it.

The politicians regularly investigate lowering interest rates on credit cards as a great political thing to do, but in the end they usually do nothing except make a lot of noise about the investigation and nothing changes.

Using Credit Cards as A Short Term Loan

Most credit cards will give you a grace period of one month if you purchase something right after your monthly bill is calculated. This assumes of course that you pay the monthly balance in full on the due date each month. If you do not, interest is charged on the full balance including the amounts you charge during the month. All this can get very expensive with interest rates in the range of 20% for most cards. If you can pay the full balance each month, then it is an interest free loan to you every month which can be quite valuable and convenient for many people.

Another point to consider is the number of credit cards that you have. We know that lowering interest rates on credit cards is not something that is going to happen, so really you only need one or perhaps two credit cards at the most. The writer has two cards mainly for emergency situations. Several times we have had our card declined for no fault of our own. Once the credit card system was down for one of our cards and no transactions were being processed, so we used the other one. Another time our credit card was compromised and we had to have it shut down by the bank. We were traveling at the time and fortunately we had a second credit card to use to pay for travel expenses.

Lowering Interest Rates on Credit Cards – Pay on Time

We think that managing your credit card balances and paying the full balance in full on the due date is the most effective way of controlling your interest rate costs and effectively lowering interest rates on credit cards for us. Anytime you have an unpaid balance past the due date for your statement, consumers are going to be charged at the high rates that credit card companies charge. Try to avoid paying these high interest rates. It just makes your purchases even more costly.

Save

(Visited 12 times, 1 visits today)

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

AddThis Social Bookmark Button

Leave a Reply

?>


Web Content Development