Dubai: If you’ve been trying to get rid of your credit card debt, you’ve probably heard of 0% Annual Percentage Rate (APR) credit cards that offer balance transfers.
While these offers can be great, they’re just one of the few ways to lower your credit card interest and ultimately get rid of your debt.
Here are four smart strategies that go beyond interest-free balance transfers.
1. Make multiple payments throughout the month
Each month, each credit card account issues a statement, with a due date and minimum payment. In addition to always paying more than the minimum payment, you should also consider making more than one payment per month.
Credit cards incur interest charges based on your average daily account balance, and anything you can do to reduce the balance each day will lower your interest charges. If you can make an additional payment before the due date, you will reduce your average daily balance.
2. Pay your balance early
Even if you can’t make multiple payments during the month, just making your payment a week early will save you money. When the payment is credited to your account, the average daily balance will be lower from that day on.
3. Wait to make big purchases
You can avoid interest charges by paying your statement balance in full each month. But if you’re not sure you can do it next month, there’s a little trick you can use to reduce your balance on your next statement.
Find out when your statement is due and post large purchases after that date. Charges processed after your statement ends will appear on your next statement, giving you an extra month to pay it off in full. And even if you do incur interest, every day that you can delay a large purchase will reduce your average daily balance.
4. Keep a “blank card” that you pay in full each month
When you have to carry a balance, the smaller the balance, the less interest you incur. One strategy to reduce your balance is to charge a certain fee to another credit card, on which you can avoid interest charges by paying in full each month.
For example, let’s say you need to spend a total of 1000 Dh, but you load 500 Dh on two different cards. Pay one in full and you’ll avoid a lot of the interest you would have paid if you had debited all of Dh 1000 from a card and only paid half of it.
Consider asking for a lower interest rate when applying
The interest rates on your credit card were set based on your creditworthiness when you opened your account. But it could have been a long time ago, and your credit may have improved since then.
If you have a strong on-time payment history then you may be eligible for a lower standard interest rate.
Contact your card issuer and request a lower rate. You can even let them know that you are planning to transfer your balance elsewhere. Credit card users are very profitable customers, and banks often offer special offers when they are concerned about losing your business.