How to Reduce Credit Card Interest Rate in College
Higher interests on your credit card will not only prolong the repayment but can also get you into a debt trap easily. This becomes a major hurdle if you have to go through this while in college. You certainly would want to avoid this at a time when you are starting your finances and trying to establish a good credit score. This article provides proven strategies that can help you lower the interest rates on your credit card.
Hardship rates
If all the above strategies do not work for some reason or you are at a point where you could not simply afford to pay the minimum dues, the best way to wriggle out of the situation is to call the bank and explain your hardships. Being a student you can put your case forward that you do not have a high paying job and you are barely able to pay the college fee etc. Not a single bank or card company will risk their customers ending up bankrupt. When you end up that way, they lose money in the process and hence would be glad to offer a reduced interest rate. They might also go a step ahead and help you with a repayment plan to get you out of the financial crisis.Good repayment history rates
Paying your dues every month on time will help you establish a good credit history. You can make use of this good credit history and negotiate with the card issuing company and get yourself a good deal on the interest rates. This strategy is most effective as any bank or a card issuing company would love to have a long relationship with customers who pay back on time.Competitive Rates
It has become a competitive world today where even credit card companies and banks have to strive hard to acquire and retain customers. You can call your card issuer and request for a better rate of interest. Negotiate the rates by telling them you are being offered very good and competitive interest rates by rival card companies. Any card issuer will not like to lose a customer and your request will be fulfilled. If you are a customer who pays the dues on time, any bank or card company will be happy to offer the best interest rate rather than losing a loyal customer.Fixed or Locked-rate credit cards
A recent business move by card companies and issuing banks is to offer credit cards that will have fixed or locked interest rates. These interest rates are significantly lower than the normal rates and they remain fixed till the debt is closed. One of the advantages is that you do not need to remember when your promotional interest rate expires as In the case of a no-interest credit card. However this strategy will not work out if you already have higher-interest balances on the same card, as the potential savings from the reduced interest rate will be low.Balance Transfers
Balance transfer is another effective way to reduce your interest. You can transfer your funds (outstanding that is due) from one card to another. Do a little research and find out card companies that offer the lowest rate possible. With the completion in the market many banks now offer attractive balance transfer rates as it is in a way new business for them.No-interest cards
A best way to start your finances while at college is by getting a no-interest credit card. These no-interest credit cards are normally offered as promotional strategy by banks and card companies, with a validity period, which is usually six months or a year and after that the normal interest rates would be charged. A no-interest credit card is a perfect choice as you will know exactly when you need pay off the debt. If you are exactly sure of paying the minimum amount due every month and the principal at the end of the term, a no-interest card will be an ideal choice.A little bit of research and perseverance will help you get a reduced rate of interest on your credit cards. Reduced rates will lower your debt and offer a potential savings on interest.
Resource Links
Answers About Credit Card Interest Rates by U.S. Department of Treasury
Find a credit card for students with our credit guide to start building your credit history.
