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5 Credit Hacks to Lower Your Interest Rates

July 26, 2017
, , Budgeting, Interest Rates
Are you having a hard time making headway on your principal and just paying interest? Here are 5 credit hack to lower your interest rates.

Are you having trouble with interest?

This might surprise you, but lowering interest rates is actually much easier than you think. While it takes some effort and a bit of persistence, you too can make your credit care interest much easier to manage.

If you’ve been struggling to pay your interest back, or if you need a break, here are five tips to help you lower your credit care interest.

Try a balance transfer.

This simple solution is an easy way to lower interest rates.

Basically, what you do is you take your balance from a high-interest credit card, and move it to a low-interest one. This will help you pay off the interest faster.

There are several 0% balance transfer options available for people looking to improve their interest rates.

Of course, there is sometimes some fine print when it comes to transfer fees. You will have to do your research when it comes to figuring out the transfer option that’s right for you.

In general, though, this is a great way to get a lower interest rate on your credit cards.

Obviously, this will involve switching companies, so if you’re looking to stay loyal to a certain bank for whatever reason, this probably isn’t the right option for you. Luckily, there are several more things you can do to improve your interest rates.

Improve your credit score.

A lot of banks will be willing to provide lower interest rates to you. But first, you need to improve your credit score.

This will help to make you eligible for lower interest rates because you’re seen as more responsible.

But you might be wondering how you can possibly fix your credit score when you can hardly keep up on your interest rates. It seems like a losing battle, doesn’t it?

Luckily, there are several simple steps you can take to lower your credit score, including:

  • Keeping track of your charges
  • Thinking long term
  • Having a written budget to stick to

If you find that you have bad credit, there are probably some bad habits you need to break. We’ve talked more about that — and how you can follow the steps listed above and more to better credit — before.

If you want to take control of your credit, you can learn more here.

Apply for a new card between loans.

After a big purchase, like a house or a car, your credit score can suffer. And that means that you’ll wind up paying a higher interest rate if you get a new card in this time.

However, there is a way around this: apply for a new card right after the purchase.

This is because, after a purchase, there’s generally a bit of a lag between when you buy something and when the effects actually show up on your credit score report.

If you absolutely must get a new card, do it before the report is updated.

This will allow you to get the lowest interest rate possible because your credit score is much lower than it will be once it updates.

This is a great way to get the most out of new credit cards without having to worry about higher interest rates because of new purchases.

Ask what your friends are paying.

This is especially important if you have friends in the same bank.

A big part of getting lower interest rates is negotiating. And if you’re going to negotiate, you need the information to back it up.

Now, what do you think is more effective? “You should give me lower interest rates,” or, “Your client, who is roughly in my age bracket and has a similar credit score, has this much interest. I’d like to have a similar interest rate to them.”

We know which person we’d go with.

We know that it’s awkward to talk about money with friends. But this can ultimately be beneficial for everyone involved. Knowledge is power, so knowing how much your bank is charging other people can really help when it comes time to ask.

If you want lower interest rates, you should know what to reasonably expect from your bank, and this is a great way to get that information.

When in doubt: ask.

Lower interest rates aren’t just going to fall into your lap.

If you want your bank to give you a lower interest rate, you’re going to have to ask for it. Sometimes, you’re going to have to ask more than once.

You should be persistent, but also polite. Make sure that they know that you’d like to continue using their services … but that you’re also willing to go if they don’t make you an offer.

This type of negotiating will take time and effort. But in the end, it can really pay off.

You deserve to have an interest rate that you can live with. And banks want you to be able to pay off your things and love your life.

So reach out to them. Make it clear that the current system isn’t working for you. You’d be surprised by how willing they are to work with you to fix it.

Want more tips to lower interest rates?

Finance isn’t easy. A single blog post might not be all you need to get the help that you need.

Sometimes, even when you have the best of intentions, you just need a little help.

That’s what Cigno is here for. We offer short term cash advances up to $500.

These tips are great to help you for the long term. But in the short term, you need to pay off the interest rates you have now.

If you’re looking for a bit of extra cash to help you out, we’re more than happy to help you get that.

Of course, you should only borrow as much as you need to, and as much as you can repay. But if that sounds like you, we encourage you to use our services.

If you need a small cash advance, contact us today.

Misinformation: 5 Common Credit Card Myths

Are you looking to get off on the right foot with your personal finances? Then you should take a look at 5 Basic Personal Finance Facts People Overlook.

It can be tricky to know just where you stand with your finances. Many people are full of sage advice that’s just plain wrong, and it’s easy to get caught up in misinformation when managing your finances.

The way we use our credit cards is one of the biggest causes of misinformation out there. We’re myth busting and giving it to you straight, so you’ll know exactly where you stand and which myths you can ignore.

Read on to learn the common myths that you may have believed in the past.

The Most Common Credit Card Misinformation

As of October 2014, the Reserve Bank of Australia reported that there were more than 15 million charge accounts and credit cards. And credit card debt was heading close to $44 billion.

Big businesses are also investing more into the industry in Australia. IBISWorld reports that between 2010 and 2015, the industry had a revenue of $11 billion. Annual growth was also at 2.7%.

This is because consumers can get credit cards at department stores, supermarkets, and even while flying at 35,000 feet. That’s why it’s so important that people understand how their credit cards work. Here’s some of the most common misinformation:

Myth 1: You Should Always Carry a Balance

No one really knows how this misinformation became so popular, but it’s a big one. Many people think that once they have a credit card they can then buy things and pay them off over a period of time.

While this is possible, it’s not a good idea. Using your credit cards responsibly means paying off the balance in full each month.

This saves you interest charges, and will sometimes even give you interest-free days. Those interest-free days can be used when you make purchases the next month.

When you’re carrying a balance on your card, you’re losing money every month as you’re only paying off the interest. And if you are applying for credit elsewhere, you’ll have to declare the debt on your card and may look irresponsible to those lenders.

Don’t forget: If you fail to pay the minimum payment each month, you can be in huge trouble with your bank. You can expect to be charged fees for failing to meet your obligations. If you continue to default on your payments, your account will eventually be sent to collections.

Myth 2: Getting Credit Cards Hurts Your Credit Rating

The credit rating system works a little differently in Australia than it does in other countries. Unlike some countries, your credit rating usually isn’t common knowledge.

However, banks, mobile phone companies, and mortgage insurers will often check your rating. That’s why it’s so important that you’re being responsible with any credit you have.

Actually, a successful history of using credit cards is likely to have a positive impact on your credit rating. Your rating is made up of a number of different factors, including:

  • Types of credit
  • New credit
  • Length of history
  • The amount you owe
  • Payment history

Generally, the biggest attention is given to your payment history and the amount you owe. A good track record of paying off your balance each month will show a responsible credit history.

Successfully applying for a new credit card will help you generate more credit history, which is a good thing.

Myth 3: A Credit Card Equals Debt

Credit cards have gotten a bad reputation lately. There’s a lot of misinformation about healthy financial habits and credit card debt.

Some people automatically associate credit cards with poor financial habits and debt. This isn’t true, and people have credit cards for a variety of reasons including:

  • Airpoints
  • Financial backup
  • Flexibility
  • Convenience
  • To generate a credit history

The key is to manage your available credit well. Your credit limit is the total amount you can put on your card, but this isn’t a goal.

You may have a credit card that has a limit of $10,000, but if you’re paying it off in full each month, you have a period where you’re debt free.

Myth 4: Cutting up Your Card Will Fix Your Debt

For some reason, cutting up your credit card has become synonymous with dealing with debt. The actual action of cutting up your card doesn’t change the fact that you still have an open account and a balance on that card.

Cutting up the card will stop you from using it for any future purposes, which is great if you’re carrying a balance. But unless you actively pay down the balance, you’ll be getting a call from a collections company.

Once you’ve paid off your balance, cutting up your card can feel liberating. Just remember to cancel the actual account, otherwise, you’ll still need to pay annual fees.

Myth 5: Introductory Interest Rates are the Answer

There are now a number of 0% interest credit cards available. These can seem like the answer to all your problems- after all, you’re probably paying a big chunk of interest each month if you have a balance.

These can be a great choice if you’ve made a firm commitment (and a budget) and you’re ready to pay off your entire balance. But there’s a lot of misinformation about these cards.

Many people are unaware that these low rates are only for a short period of time. After your introductory period is up, you may even end up paying higher rates than you were with your old card.

Transferring your balance to another card can be a good option, but only if you have a solid repayment plan. The goal should be to have your balance completely paid off within that time period.

You also may not be able to transfer your entire balance. Some credit card issuers will only let you transfer a partial amount of your credit limit. This can range from 80%-90%, and that would mean you would have two credit cards to pay off.

It can also take some time for credit card companies to transfer your balance between them. It will often make more sense to simply focus on paying a large chunk off your balance each month.

Are you surprised by any of the above myths? Have we busted any that you were unaware of? Let us know in the comments below if you’ve been caught out by any of this misinformation!