By reducing the interest rate on our credit cards my wife and I have saved ourselves litterally thousands of dollars in interest payments and we’ll have our debt paid off faster. Since my wife and I have decided to focus on removing our debt we knew we needed to take some steps to getting speed the process along and make it as efficient as possible. Because we are carrying a balance on our credit cards a high interest rate means slow repayment and lots of interest paid out. Over the past few days we changed all of that and reduced our interest rates.
How did we do it?
Its easy – All it takes is a little research and a phone call
Step 1 – Either:
Call your credit card provider and ask them or
Check your providers website – they probably list their credit card options – find the lowest rate one
Step 2 – Call and Change your card type
Its that easy and the impact is huge.
The impact for Me
The impact can be significant depending on your credit card provider and what interest rates they offer you. My wife and I both recently changed our credit cards to low interest ones and here’s the impact that my credit card will see:
At 19.75% with a $5000 balance my monthly interest is $80.65 (about $1022 per year)
At my new rate of 9.15% with a $5000 balance my monthly interest is $37.36 (about $448 per year)
With a simple phone call I was able to reduce my yearly interest payments by almost $575 per year which over the long haul makes a huge difference. If I keep my payments exactly the same then all the difference goes directly to my principle. Using my credit card as an example if I hadn’t made the switch and I paid $100 per month, which is about my minimum payment after a year I would have a balance of roughly $4722 which isn’t all that great considering I paid out $1200 in payments. With my new rate of 9.15% with the same $100 monthly payments my balance after a year will be $4147.
By lowering the interest rate on your consumer card you can very easily cut years off your repayment time which is exactly what my wife and I are looking to do.