Credit card will be real bliss if one does not have to pay interest on the same. The easiest technique for credit card users to avoid incurring interest is to pay their balance in full and on time every month. By following this, one can not only avoids the higher penalty interest rates but also maintains a high credit score. Customer with high credit score always receives bank’s most favorable interest rates.
But if the user is unable to repay the monthly bills there is another ways to save interest charges which are as follows:
1. With help of 0% credit card one can control their credit card charges While looking around for suitable credit card offering 0% interest one should consider certain points:
- Tenure for 0% interest rate ( In today¡¦s competitive banking environment many providers are offering 0% interest rate for the promotional periods from 12 to 24 months in length)
- Does the provider allow for the transfer of other balances to 0% interest rate? If yes what are the charges
- Any penalties for late payments: One should make at least the minimum repayments to avoid penalties.
Customer should read the important information in the Cardholder agreement to find the actual (hidden) cost of using that particular credit card.
One should calculate the fund needed to clear the balance within promotional period. If there is any delay in repayment of debt and the rate rockets.
2. To take the at most benefit of 0% interest rate offer customer can transfer their outstanding balance from high interest rate credit cards to it. This facilitates saving on the cost of interest. There are many providers who offer 0% on transfer balance. But one should think twice before opting for the same. As they usually will fly to enormous rates after the term has lapsed. One has to be prepared to pay the card off and cancel it by the end of the term to protect oneself from another high interest trap. If one still has not repaid the debt when the promotional period lapses, shift it again.
3. To negotiate with the credit card provider for the lower interest rate: There are always benefits for valued customers. Most of the times credit card providers are ready to reduce the interest rate if one meets most or all of the following conditions:
- Customer has good credit rating
- Excellent payment record with particular credit provider
- Customer who does not have high debt-to-income ratio
Credit card providers need business and often have customer retention programs which reduce interest rates upon request. Often they will comply especially if one mentions that he is considering switching with other Credit card provider.
4. If one is facing problems paying off credit card debts, the person should call the credit card company and explain the situation to them thoroughly and they may be able to help. They may offer lower rate or reduced monthly payments for a short term.
5. Consolidate credit card debts to low interest credit cards: Holding multiple cards is difficult to manage. Its always advisable to transfer balance from higher interest cards to lower one.
In short, do it smartly and credit cards are the cheapest way to borrow.
[ written by: radhika.bhalerao]
[Image Soruce: http://www.sxc.hu]