There are many steps you can take to slash the interest you pay on your credit card. This can potentially save you hundreds if not thousands of dollars over time.
So here are ClearScore’s top tips for slashing your interest costs so you can take advantage of everything a credit card has to offer while also keeping on top of your finances.
1. Transfer your existing balance to a 0% credit card
Lots of credit card providers offer a 0% interest rate credit card for people who want to switch their existing credit card balance over to a new, more affordable card. Remember, the 0% rate will only be for a finite period, usually, up to 24 months. So you will pay interest on the funds you transfer to the new card after the interest-free period ends. But you might be able to pay off the balance in full over that time and not pay any interest on the money you transfer.
Some of these cards also come with other benefits such as no annual fees. But check the fine print because sometimes you will pay a one-off fee when you transfer your balance to the new card, with the fee added to your balance. Why not check out the.
2. Consolidate your credit card into a personal loan
Another option is to transfer your credit card balance to a personal loan. These loans often accrue interest at a lower rate that the rate you will be charged on your credit card. So although you will still pay interest on the balance you transfer to your loan, it will be at a lower rate than the rate you will pay on a credit card. You can view personal loan lenders, in your ClearScore account.
3. Add your credit card balance to your home loan
If you have a mortgage, you could explore adding your credit card balance to your home loan. Like a personal loan, it will attract interest at a lower rate than the rate you will be charged on your credit card, which will also help to keep your interest rate costs down over time.
4. Pay off the balance within the interest-free period
Many credit cards come with interest-free periods of up to 55 days. This doesn’t mean you have 55 days to pay off individual purchases. Rather, the interest-free period begins at the start of the statement cycle. So if your statement cycle starts on the 23rd of the month, you won’t pay interest on a purchase made on that day for 55 days. But if you buy something 30 days into the payment cycle, you’ll only get twenty-five interest-free days on the item. You won’t pay any interest if you pay off the balance in full before the end of the statement cycle.
5. Avoid cash advances
Another way to ensure you don’t pay any interest on your credit card is to ensure you don’t withdraw cash from it. Interest-free periods tend not to apply to cash advances, which means you will pay interest on the amount you withdraw from the time you take the money out of your account.
Keeping on top of your interest repayments is a great way to maintain your credit score, which lenders consider when they assess any credit application. If you have a low credit score, you may pay a higher rate of interest than someone with a higher score. Check outtoday for a free copy of your credit score and credit report to explore all the different credit card options available to you.