Credit cards can help you get out of a sticky situation. However, the downside is that they can get you into a debt trap just as quickly, if you do not use them judiciously. The best way to avoid this situation is to have a good understanding of the credit card that you have chosen. Pay attention to the terms and conditions, and try to frame your financial habits around them. Making judicious financial decisions, and not increasing your liabilities by taking casual loans is just as important. You must check your credit card loan interest rate before you choose your card. Some cards like the Bajaj Finserv RBL Bank SuperCard have quite competitive rates on offer. Furthermore, keep in touch with the lender to stay abreast of any changes in terms and policies that might affect the interest amount on your loan.
What is a Credit Card Loan Interest Rate?
Simply put, this interest rate is the amount you need to pay for the amount you utilize from your credit limit in the form of a loan. This interest rate varies from lender to lender. It is wise to take a good look at the different interest rates imposed by the lender before you invest in a credit card. Oftentimes, people transfer their high-interest liabilities to their low-interest credit cards to lower the amount they are repaying. However, one needs to calculate the repayment period and weigh the benefits accurately before taking such a step. A shift in terms and conditions from the bank can upend the plan totally.
3 Strategies to Lower Credit Card Loan Interest Rate
You must toe the line with these rules if you do not want to get swamped with a huge debt.
Talk to the Lender: The first thing that you can do towards lowering your interest rate on loans taken against your credit card is talking to the issuer. Make sure you put across your plight effectively so that the authorities consider your case. You have nothing to lose but a little bit of time, and there is a lot to win. If your request is considered, you can save a lot of money that can in turn be used to repay your existing installments. There is a fair chance that you might be able to talk the issuer into this because they try their best to retain customers. If you are denied, talk to the officials and ask them about ways to reduce the interest rate. You should also enquire about the usual time-lapse after which your case can be reconsidered.
Always Pay on Time: Make sure you pay your monthly installments on time. Do everything in your power to ensure this. Set reminders on your phone, pay digitally and make sure the due date falls after your payday every month. Coordinate with your lender every time you feel like you might miss the next installment. Avoid paying the minimum amount in your installments. Although this feature bails you out on emergencies, you still need to pay interest on the outstanding balance that gets accumulated with the next month’s installment. In other words, you are paying 3-4% extra for nothing. Some lending entities also charge a fine if you do not pay installments in full. Take your installments seriously to avoid ending up in a debt trap.
Balance Transfer: You can only do this when you have more than one credit card. Having more than one card has several benefits, and this is the best among them. It might so happen that you are running short on money, and you have a substantial amount to pay. In that case, you can transfer the liabilities to another card that offers lower interest. Some people like to do this on a 0 APR card so that they do not need to pay any interest at all. However, you should keep in mind that the 0% interest feature is often promotional, and ends after a certain period of time. Calculate the interest that will be charged after the promotional period is over. Go for the balance transfer only when you find that you are paying less on this card on the whole.
Further Caveats that You Must Remember
The ideal way to make the best use of the lowered interest rate is not canceling it out by making unnecessary purchases. Refrain from such desires if possible, and use the saved funds towards relieving the installments. Be on the watch at all times and be ready to opt for another card that offers significantly lower interests.
Finally, choose your credit card wisely. The Bajaj Finserv RBL Bank SuperCard offers you instant discounts on purchases you make on e-commerce sites. You can also avail of personal loans for up to 90 days with a nominal interest rate of just 1.16% per month. You can repay the amount in three EMIs, and use the credit card to bail you out of exigencies.