In this article, we will learn how to deal with rising interest rates on credit cards. We will review the steps you can take to manage this increase and minimize its impact on your financial account.
Opting Out of Higher Interest
When interest rates increase on your card, you usually have a period to opt out of this increase. If you choose to opt out, your account will be closed, and you can continue paying off your balance at the lower interest rate. Once your balance is paid off completely, you will not be able to use the card again, as the account has been closed.
Negotiating a Lower Interest Rate
Contact your card issuer and request a reduction in the interest rate. If the interest rate has increased due to missed or late payments on your part, you may not be able to lower the interest rate, even if it’s due to a different credit card. On the other hand, if you always pay your account on time and one mistake led to the increase in the interest rate, you may be able to convince the card issuer to lower the interest rate.
Paying Off the Balance as Soon as Possible
Pay off as much of your balance as possible before the increase takes effect. If you can reduce your balance before the new interest rate takes effect, you may not feel the impact of the increase as much. You might have to cut spending in other areas to allocate more money towards your credit card balance.
Transferring the Balance to a Card with a Lower Interest Rate
Transfer the balance to a credit card with a lower interest rate. Before proceeding with the balance transfer, make sure you have enough credit to handle the new balance. You might also want to compare any balance transfer fees with the cost of paying off the balance at the higher interest rate. The transfer fees may exceed the additional interest costs you will incur. In this case, transferring the balance may cost you more than paying off the balance in the first place.
Accepting the Changes
Keep the card and pay off the balance at the new higher interest rate. Although it may not be the most desirable solution, it may be the only option available. When none of the other options work, you will have to pay off the balance at the higher interest rate. In this situation, you should still aim to pay off the balance as quickly as possible to avoid high-interest charges.
As long as you continue to make timely payments (on all your accounts) and stay below your credit limit, your credit card issuer may reduce your interest rate after six to twelve months. Don’t hesitate to call and request a lower interest rate if you need to do so.
Ensure you follow these steps to effectively deal with rising interest rates on your credit card and protect your financial account.
Source: https://www.thebalancemoney.com/credit-card-rate-increase-961124
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