How to Lower Your Credit Card Interest Rate

How to Lower Your Credit Card Interest Rate

Posted on April 30, 2022

Most Canadians have credit cards and use them frequently. Many of us carry debt from one month to another even though interest rates are high. If you’re one of those like me, you might benefit from a couple of simple hacks to lower credit card interest while settling debt in Stoney Creek!

If you’re paying down debt in advance of a Stoney Creek auto loan application, and are looking to lower credit card interest while settling debt, these tips can really help!

Know your rates

First up, know how much you owe at what rates. Make a list of all your credit cards, their interest rates and how much you owe on each. Then order them in interest rate order with the most expensive at the top.

Calculate the total amount of credit card debt you have so you know where you are.

Set up automatic payments to protect your credit score

Next, if you don’t have automatic payments already set up, do that now. It will protect your credit score and prevent missed payments. While that won’t help with interest, it will help maintain your credit score so you can qualify for more credit cards or your auto loan when it comes time.

Stop using your credit cards

Next up is advice you probably won’t like. Stop using your credit cards. Or at least stop using the ones you cannot pay off in full each month.

We always recommend using credit cards but paying them off each month. That way, you get all the benefits of using a card and a positive payment history, without the interest charges.

It will only be temporary but you need to rein in your spending for a little while. At least until you have paid off the more expensive cards.

Find zero interest credit cards or balance transfer cards

The trick to minimizing credit card interest is to transfer card balances to 0% cards or balance transfer cards. Find a card with a decent interest free period and switch all your balances to that card.

Shut down any old cards you won’t use and pay off as much of that new card as you can. When the 0% interest period is close to the end, find another card and switch the balance again.

Rinse and repeat until all your debt is paid.

Some balance transfer cards charge a fee. Make sure to check the fee carefully and make sure the 0% interest period is sufficient to put a dent in the amount.

Consolidation auto loan

If you’re still not able to make headway with your credit cards, consider a consolidation auto loan. This is where you borrow more as part of the Stoney Creek auto loan and use the cash to pay off other debts.

For example, you have a car loan with $5,000 left to pay and you owe $8,000 on credit cards. Your car is worth $22,000. You get a new auto loan for $13,000, pay off the old loan and all your credit cards and have one single payment each month.

Consolidation loans don’t work for everyone and may not work for you but they are a viable option and may be what you need to get ahead of debt.

Talk to one of our team if this sounds like something you want to explore.

When you’re ready for a car loan, get in touch with the Stoney Creek auto loan experts at Northway Ford for great deals on auto finance.

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