Money Now! USA

3 Ways to Keep a Low Interest Rate - Money Now! USA 11-17-2008

Your interest rate is important because it directly influences the cost of your credit card. When you carry a balance beyond the grace period, your card issuer applies a finance charge, which is essentially your interest rate multiplied by your balance. The higher your interest rate, the higher your finance charges will be.
Even if you start out with a low interest rate, it could increase. Sometimes interest rate increases are out of your control, like when the issuer raises your rate because of market conditions. Other times, it’s your actions that cause your interest rate to go up. Here are things you can do to keep a low interest rate.


Pay your credit card bill on time every month. All it takes is one late payment to have your credit card issuer enact the default rate on your credit card. Keep paying your credit card bill on time, even if it’s just the minimum payment. If your due date falls on a weekend or holiday, plan to have your payment arrive before the due date.

Keep your credit card balances low. Maxing out your credit card is another surefire way to get higher interest rate. Credit card issuers see high credit card balances as a risk. So, to compensate for your increased risk, they require you to pay higher interest on your balance. It’s a good idea to keep your balance below 30% of your credit limit at all times.

Don’t bounce your credit card payment. When you write the check for your credit card payment, make sure there’s enough money in your checking account to cover it. Not only that, should make sure other outstanding checks or debits aren’t going to deplete your account. Enrolling in your bank’s overdraft protection program can prevent bounced checks.
Make sure you’re managing your other credit cards, too. Many credit card issuers have a universal default clause that allows them to increase your interest rate even when you’re late on another credit card payment.