How to Get a Good Interest Rate on a Credit Card
If you’re anything like most Americans, you have about four credit cards.
The benefits of using credit cards are well-documented: they’re safer than debit cards, have multiple rewards, bonuses, and cash-back incentives, and are key to building credit.
However, credit cards aren’t free money. Credit card companies charge an interest on your balances, which is how they make money.
When taking out any credit facility, you want to get a good interest rate. Credit cards are no different. But how do you do that?
Read on for tips and hacks for getting a good interest rate on a credit card.
Build Good Credit
This is the #1 way to get a lower interest rate on any credit card.
Credit card companies routinely check credit card applicants’ credit scores to determine their creditworthiness. With this information, they’ll be able to make not only a lending decision but also an interest-rate decision.
If you have good credit, there’s a good chance your credit card application will be approved and you’ll be rewarded with a friendly interest rate. But if you’ve got bad or poor credit, your application could be denied. But if it’s approved; you’ll be slapped with a much higher interest rate.
As such, check your credit report and know your credit score before applying for a credit card. If the score is bad, build it first. Striving to get the best rate is why building credit is important.
Maintain Existing Accounts
The allure of credit cards can be irresistible. This is mainly because there are thousands of credit card companies and they’re all promising a ton of benefits.
If you’re not careful, you may find yourself applying for as many credit cards as possible. This is a big mistake. You’ll not only be setting up yourself for a vicious cycle of debt, but also for a higher interest rate.
Most credit card companies offer a lower interest rate on existing accounts, so instead of switching to a new card company when a credit card expires, it’s best to stick with your current provider.
Shop Around for the Best Deal
In a marketplace awash with credit card offerings, shopping around for the best deal can seem impossible. Every day, you’re seeing ads about new credit card offerings and it’s easy to make an impulsive application just because an offering seemed too good to turn down. And because you didn’t read the fine print, you find yourself trapped with a card that now seems different from what was advertised.
When applying for a new credit card, take your time to shop around. Compare multiple quotes and read the fine print. This is how you’ll increase your chances of getting the lowest interest rate on a credit card.
Chase a Good Interest Rate on New Credit Cards
Credit cards are awesome financial tools, but they make better financial sense when they come with a good interest rate. The power to find a friendly rate lies within you, so ensure you’re exercising it fully. Build good credit, shop around for good deals, and try to maintain existing accounts.
Keep tabs on our blog for more financial advice.
Ben Stern wrote this article on behalf of FreeUp. FreeUp is the fastest-growing freelance marketplace in the US. FreeUp only accepts the top 1% of freelance applicants. Click here to get access to the top freelancers in the world.
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