Credit cards are among the first things affected when interest rates start creeping up. Unfortunately, that often impacts the households that can least afford increased bills. If you’ve noticed higher interest charges appearing on your monthly statement, look into these strategies to help lower overall costs.
Loyalty Reward Points
Many banks and credit unions now offer rewards programs, and credit cards are excellent tools for building points with them. Earning is directly linked to how much you spend each month, with a set number of points earned per dollar of purchases. In addition, it is common to get bonus points during promotions or in specific store categories, such as restaurants or gas stations.
Some specialty stores market branded credit cards where rewards translate into special purchase offers. For example, gas cards can often be used for everyday purchases while helping you accumulate discounts on gas and convenience store purchases.
Low Introductory Rates
Large purchases can accumulate hefty interest charges unless you pay them off each month. However, if you know you will be buying an expensive item soon, now might be a good time to shop around for cards offering low introductory rates.
If you can’t decide between an introductory rate and a great rewards program, consider options like the American Express credit card that offers both. You’ll often get rewarded with bonus points if you make established minimum purchases after opening an account.
Fixed Rates on Large Purchases
Another option if you are looking to charge a large amount to credit cards is to ask about special fixed rates on large purchases. Some companies offer programs that treat certain purchases like a loan instead of a credit charge. You will pay a set amount each month and know ahead of time when the balance will be paid in full. This strategy helps keep overall interest costs lower, so it’s definitely worth a look if you know you are going to have a balance each month.
Discounts on Purchases
Discounts aren’t only limited to store brands. Many card companies now offer special price monitoring services that automatically check for discounts or savings codes on online purchases. If you do a lot of online shopping, this is an excellent way to save.
Some cards go a step beyond rewards and discounts by offering cash back on everyday purchases. This can be especially attractive if you tend to place a lot of regular bills on your card each month and then pay them off. Look for offers ranging from 2% to 5% to see your savings build.
Balance Transfer Promotions
While attractive balance transfer options are far less common when interest rates are higher, they are still available. Keep an eye out for transfer checks occasionally appearing in the mail. Alternatively, if you haven’t seen one in a while, contact your credit card companies and ask if they are offering any fixed-rate transfer offers.
Be careful about up-front transfer fees associated with these. For example, if you only plan to keep the balance on your card for a year, every percentage point in fees should be added to your interest rate to get a better picture of the total cost.
Pay Off Credit Card Debt
If you have the ability to pay off your credit card debt, now is as good a time as any to do that. Remember that even one extra percentage point in interest can make a big difference in how long it takes to pay a bill.
There are ways to combat high-interest credit cards. Features like special introductory and balance transfer rates, fixed loan arrangements, rewards programs, and shopping discounts can all help keep more money in your pocket each month. However, regardless of how you choose to combat high credit card interest rates, it is also important to look at why you are paying them in the first place and make a plan to pay down your debt.