At this moment in time, millions of people throughout the UK, but also from other areas of the world are constantly being affected by the increasing interest rates for their loans. Unfortunately, not many realize the true extent of the problem.
To put things better into perspective, we have prepared a short example, meant to outline how big the problem actually is. A meal worth around £15 at first, can become considerably more expensive, if left on credit and unpaid for- thus reaching higher values, of over $20. Not only this, but the main reason why people with debt take so much time to cover it all, is because of the increasing interest rate, thus creating what analysts prefer to refer to as a vicious cycle. Thankfully, there are various techniques that you can try out, in order to reduce your interest rate. In this article, we have prepared a couple of tips that, if followed, can drastically reduce the amount that you are paying as interest fees for your current debt.
Attempt negotiating a lower interest rate
Not many people are aware of this, but the strategy of attempting to negotiate a lower interest fee for the credit cards that you already have, may be considerably more efficient then getting a new credit card that promises lower interest fees. As you cannot run from your credit balance, it is important for people who own debt to attempt to find solutions.
Prior to negotiating a lower interest rate, it is important to do your homework. With this in mind, look into the rates that other banks and credit cards are providing, and then attempt to use this data as leverage when it comes down to bargaining with your bank, as this will likely lead them to agree to the rate that you are proposing. Another important tip would be to kick things off without your oldest card, as loyalty does indeed pay. Simply let the bank clerk that you have been a customer since a specific year, and if that checks out, then chances are that you will be rewarded for your loyalty. Regardless, it is important to be persistent as well, so if you do not succeed at first, then try again and again until you manage to get a special discount. There are numerous ways to go about this, but the easiest, yet most effective would be to simply give the customer desk a call. If this doesn’t work, then face-to-face contact may make things easier, so don’t be afraid to go to the bank and ask to speak with a credit or interest representative, as they may have an ace up their sleeve that they can use to help you get a better offer from the bank. Usually, bank employees are quite flexible, and some decisions are left at their discretion, which is why negotiating is bound to work most of the times.
Attempt transferring your balance to manage getting a lower rate
If negotiating doesn’t help you get access to a better interest rate on your credit card and/or loan, then you might want to attempt the idea of transferring your balance to help yourself get a lower rate. Before doing this, it is important to keep in mind a couple of important aspects, such as the balance transfer fees, annual fees and any other taxes that you may be susceptible to, and then proceed to determine whether the change will give you access to higher limits, a lower credit, better interest fees or any other form of benefits.
Some of the other tips that you may want to take into account include the idea of applying for a new card while you are in between loans, as continuous credit-based purchases can proceed to reduce your credit scores. Not only this, but make sure to always pay off your balance before the sum expires, and turns into higher taxes, or a higher interest fees.
If you have managed to achieve a lower interest fee, keeping it can be quite challenging. With this in mind, attempt to budget better, and try your best to spend less money than what you are making, while always being either on-time, or even early with payments. This will increase the bank’s trust in you, thus avoiding an interest fee increase. It is also important to avoid exceeding roughly 35% of your credit card limit, but also to constantly check your credit score.
If all else fails, then you may want to consider the idea of getting a payday loan, as these loans represent a great emergency fund. While they have higher interest rates, they last for shorter periods of times, thus putting you in the win regardless of how you look at things.