Keeping Credit Card Interest Rates Down

By: Sarah Batista
By: Sarah Batista

November 16, 2005

The average American carries thousands of dollars in credit card balances every month and at interest rates of up to 30 percent, it's costing some people a fortune. But before you can lower those rates, you first need to know how much you're paying and why.

Check almost anyone’s wallet and you’re sure to find at least one piece of plastic.

Said some consumers: "I have three credit cards, maybe four." "Two," said another. "One and a debit card," commented a third.

But do Americans really know how much interest they're paying each month?

Some guesses were: "I think it's 3.5 percent." "29.99 percent APR." "4.5 percent? 2.3 percent? I don't know."

Not knowing how much your interest rate is could be dangerous.

"You make your payment late one month, they bump that interest rate up you know from eight percent up to 15. You're late another time they put it up to 22 percent," explained Marla Puckett, financial specialist with Clearpoint Financial Solutions.

And that can add up; the average family carries a $9,000 balance, at 13 percent the interest alone amounts to over $100 a month, but at 30 percent, that amount more than doubles.

There are ways to lower your interest rate. The easiest way is to call your credit card company and haggle for a better rate.

"It doesn't ever hurt to try and do that," said Puckett

But sometimes even that's a gamble.

"They said that it was automated and that they couldn't help me at all, that it happens in the computer," said one credit card user.

Another option is to transfer your balance to a card with a lower rate, but be careful, many companies will entice you with a low or zero percent introductory rate before jacking that rate up just months later.

"They bait you with zero percent and then you're stuck," said another consumer.

But be sure not to overdo it on the balance transfers, too many can have a negative effect on your credit score. The best advice is to read the fine print and know what you are getting yourself into.

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