A credit card’s interest rate, also known as the annual percentage rate (APR), refers to the fees you pay for carrying a balance on your credit card. If you don’t pay off your balance in full each month, the interest compounds based on this given rate, which can make your debt grow quickly. This makes the interest rate arguably the most critical figure that you should familiarize yourself with upon getting your credit card.
Due to the importance of the APR in terms of financial management, credit card issuers make it a point to disclose the interest rate through different avenues. When applying for a Maya-powered Landers Cashback Everywhere Credit Card, for example, you’ll find the details of the Maya credit card interest rate and fees in the terms and conditions, your credit card statement, and the support section of the website.
Knowing where to find this information and how it affects your credit card bills can help you better manage your finances and save you a significant amount of money over time. Here’s what you can do to keep your credit card interest fees within a manageable threshold.
Make a Habit of Paying Your Balance in Full Every Month
Remember that credit card companies charge interest only on the unpaid balance. As such, one of the easiest ways to avoid interest fees is by paying your balance in full each month. If you ensure that you clear your balances on or before the due date, then you can completely avoid interest charges. This strategy works best for people who use their credit cards as a convenient payment tool rather than a way to borrow money. Staying disciplined and not spending more than you can afford helps you avoid falling into the cycle of paying interest month after month.
Always Pay More than the Minimum Due
While it’s best to pay your credit card balance every month, there are times when it’s not possible or ideal. For instance, if you used your card for a large purchase, you might find yourself struggling to manage the rest of your bills. This is where your minimum due comes in.
The minimum due is the lowest amount you can pay each month to keep your credit card active and your account in good standing. However, simply the minimum due is not the most effective way to manage your debt. This is because the minimum due is just a small portion of your total balance. If you stick to only paying this amount per billing cycle, the majority of your payment goes toward interest and not the principal amount. On the other hand, when you pay more than the minimum due each month, you’ll reduce your balance faster, which in turn reduces the amount of interest you owe. This practice can significantly shorten the time it takes to pay off your credit card balance.
Stick to a Strict Deadline when Making Payments
Missing your credit card due date leads to costly penalties; worse, it also increases your interest rate. These can add a significant amount to your debt, resulting in an even bigger financial burden. To avoid these costs and keep your interest rate fees on a level you are comfortable with, ensure that you make timely payments. Setting reminders on your phone or automating payments are simple yet effective ways of ensuring you’re always on time with your payments. These habits not only help you avoid late fees but also keep your interest at the original rate, which benefits your long-term financial health.
Set a Hard Limit to the Number of Cards You Use
Each card comes with its own due dates and interest rates. As such, managing multiple credit cards increases the likelihood of missed payments or carrying balances on multiple accounts. This can lead to overall higher fees and make it difficult to keep track of payments. By limiting yourself to one or two cards, you simplify your finances and enable yourself to focus on paying off any balances more efficiently.
Plan Purchases and Take Advantage of Zero-Interest Promotions
Many credit card companies offer zero-interest promotions on balance transfers or specific purchases. If you have existing credit card debt, consider transferring the balance to a card that offers zero interest for a limited period. This gives you a window of time to pay off the debt without incurring additional interest fees. However, you need to be cautious: if you don’t pay off the balance by the end of the promotional period, the remaining balance may be subject to higher interest rates. Always read the fine print and get in touch with customer support if you’re confused about certain terms or provisions.
Negotiate With Your Issuer to Get Lower Interest Rates
It may come as a surprise to some, but credit card interest rates aren’t always set in stone. If you have a strong credit history and have been a responsible cardholder, you might be able to negotiate a lower interest rate with your credit card provider. Give them a call and explain your situation. Many companies are willing to lower interest rates for customers they want to keep, especially if the said customer has a record of consistent payments and keeping their balance under control.
Minimize the Use of Cash Advances
While cash advances are indeed a quick way to get cash, they come with much higher interest rates and fees than regular credit card purchases. What’s more, interest on cash advances starts accumulating immediately and is also often coupled with a transaction fee. Thus, it’s smart to only use cash advances during emergencies. Also, try to pay the amount off as quickly as possible to avoid ballooning interest charges.
Review Your Statements Regularly
By checking your statements thoroughly, you can monitor your spending, spot unauthorized charges, and ensure that your balance is within a manageable range. This helps you stay on top of payments and prevents your balance—and interest charges—from growing unchecked.
Keeping your credit card interest fees at a more manageable range benefits you in both the short and long term. By avoiding excessive interest charges, you can reduce your overall debt faster and free up more funds for savings or other expenses. In the long run, maintaining low-interest fees helps preserve your credit score and makes it easier for you to access better financial opportunities like loans and future credit cards with more favourable terms. The sooner you take control of your credit card debt, the easier it becomes to manage your overall financial health.