Tips to Avoid Paying Credit Card Interest

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More purchases are made through credit cards than any other consumer payment method. Literally billions of dollars every month is being loaded onto credit cards across the country. While it can be an excellent way to manage cashflow if your very disciplined it is all too easy to fall into the the debt trap and fail to pay your bills in full each month. As a result of not paying your card off in full each month you get charged interest on the outstanding money based on the interest rate (APR) of the card you own.

Interest rates on credit card vary wildly from introductory zero percent offers right up to cards with crazy interest rates such as forty percent designed for those with very bad credit ratings. In order to avoid having to pay this interest rate, it is important to pay your credit card off each month.

Interest rates are charged on an annual basis, but credit card users are charged a percentage of that interest rate each month until the balance is paid off. For example, if you charge $1,000 one month and paid your credit card off, you would not have to pay any more money than $1,000. However, if your interest rate was 13%, then you would have to pay an extra $130 a year for the initial $1,000 charge.

If you want to avoid paying interest on credit cards, follow these simple tips:

Credit Card Balance Transfer: When you use a credit card, you always have the option to transfer the balance of that credit card to a new credit card with a lower interest rate. A credit card balance transfer is a simple way to avod paying interest on your credit cards. However, make sure that the credit card that you transfer your balance to does not charge a fee for the balance transfer (or that your original credi card does not charge a fee).

Also, keep in mind that just because you transfer your credit card balance does not mean that the money that you owe will disappear. You will still have to pay back the money that you borrowed. You may be able to avoid these high interest rates by moving to a low rate credit card.

Debt Consolidation: Many credit card users have too many credit cards that they need to manage, including everyday credit cards and credit cards for specific stores. To make your finances simpler to manage and create just one bill each month you could think about debt consolidation. A debt consolidation program is a program through a third party that makes it possible for you to consolidate all of your credit card bills into one so that you can manage and predict your monthly payments. When you use a debt consolidation program, you will have to pay a set monthly payment, which puts you on a payment schedule that should match your income and current financial situation.

Ask for an Extension: If you have enrolled in a credit card program that has a low interest rate, it's always okay to ask the credit card company for an extension of that low interest rate. When a low interest rate credit card offer is set to expire, simply call the credit card company and ask for an extension. If they do grant an extension be sure to ask they won't charge you extra fees for this service.

It can be a challenge to avoid paying interest on your credit cards. However, depending on the amount of credit card debt that you have accrued, your interest could cost you thousands of dollars each year. Therefore, a little legwork may go a long way to help you save your money and avoid paying high interest rates.

Information about the Author:

Richard Greenwood is director of click4credit.com.au which compares credit cards and debit cards from leading banks and issuers. Richard writes on a wide range of finance issues including debt management.

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