Personal Finance Advice

Quick quiz, no peeking allowed: What is the interest rate on your credit card?

If you are like most people you probably don’t know the answer.  You probably have a vague idea of what it once was, but as interest rates fluctuate you may have lost track of what you’re actually getting charged for interest on your credit cards. 

Plenty of people don’t even peek at their credit card statements.  They just make the payments and don’t really take the time to figure out exactly how much the credit is costing them.  The truth of the matter is this: Unless you have a 0% APR and a guarantee of no fees attached to the account, the credit is costing you something.  The question is, how much is it actually costing you?

Dig out your credit card statement and take a look at your interest rate.  Does it look like a reasonable amount? If you have no idea of how much you should actually be paying in interest, take a look at what the average interest rate charged to people with comparable credit scores is.  If your interest rate is similar, then that’s great.  If it’s much higher, then it’s time to call your credit card company and demand a lower interest rate.

You should keep in mind that if you have consistently made late payments or exceeded your credit limit then calling and asking for a lower interest rate will probably be met with a cordial, “We regret that we can’t lower your interest rate at this time.”  If your payments have always been on time and you can generally be considered a valuable customer then there is a good chance your credit card interest rate will get lowered. 

Sometimes it’s as simple as asking.

If your credit card company is not willing to lower your interest rate, and you know you can qualify for a better interest rate elsewhere, go ahead and get a different card and do a balance transfer.  After all, if your creditor isn’t willing to lower your rate, why should you be loyal to them?