Thursday Trim the Trash Time: March 30, 2017
Credit Card Rates
Today’s topic for Thursday’s Trim the Trash Time is about credit cards. Interest rates for credit cards are in my opinion absurd. They border on criminality. The average rate for credit cards is 15.05%. With rates that high it is no wonder everywhere you turn you are being offered cards. It is a billion dollar industry.
This post isn’t about not having a credit card because I believe they can be very useful. I have several. The key is to not carry a large balance on them. A large balance can hurt you in several ways. A card with a 10K balance at 19% interest would require $160 a month in just interest payments. That really eats away at your ability to attack the principle. Carrying a large balance also prevents you from obtaining loans for things you might actually be interested in getting, such as a home, car, etc. Banks sadly don’t look kindly on people with high consumer debt. Kind of odd considering they are always eager to give you the credit cards and the Lines of Credits in the first place. Ah yes, love the banks.
One solution to those with higher rates around 19, 20 even 22% is to ask for a lower rate. Many banks will lower your rate if you ask. Often it depends on your payment history. A rate around 9-10% is far more reasonable, yet still too high in my opinion. The key is you never know if you can have a lower rate unless you try, so why not. It will allow you to attack the principle and be debt free quicker. You can always threaten to transfer your balance to another card, that might spring the bank into action.
Remember the bank’s mandate is to make money and how they do that is by taking yours. You can’t avoid it completely but you can limit their hold on you. It’ll be worth it in the end.
Thanks for reading “Thursday Trim the Trash Time.” Tune into tomorrow my weekly final reflection. Stay warm my friends!
“Simply calling your credit card issuer and asking them to lower your interest rate may yield immediate savings.” – Jean Chatzky
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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at budgetboss.ca.