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7 Tips to Lower Credit Card Costs

Credit cards can be a costly way to borrow. Interest piles on top of interest, month after month, and it adds up quickly. On the other hand, credit cards are convenient and sometimes necessary for such things as shopping online, reserving a hotel room, or renting a car. The key is to use credit wisely. Here are seven tips to lower your credit card costs

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Look for a Low Fixed-rate Card

Cards with a changing interest rate can go up any time and charge you more interest. Look for a card with a low introductory rate that will last at least six months. If you have a high interest card, try to transfer your balance to a lower one.

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Watch Out for Penalties

Some cards charge high late fees, and other penalties. For example, if you miss a payment or go over your limit, you may be charged a penalty, or your interest rate may go up.  If you know you’re likely to be late a few times with your payment, a card with lower penalties and a slightly higher interest rate may be a better deal.

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Pay on Time

Even if you have a card with a great interest rate, you may find the rate goes up the first time you’re late with a payment. Even if you only pay the minimum, make sure you pay on time. You’ll also keep a better credit rating.

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Ask for a Lower Rate

It can often help if you pick up the phone and talk to your credit card company. If you’re a good customer, they may give you a break to keep your business.

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Know What You’re Getting

Always read the fine print. If you have a great introductory rate, make sure you know what happens when it ends. For example, what will the new rate be? Does anything else change when the interest rate changes?

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Avoid Annual Fees

You may get a lower interest rate, or cash back but ask yourself if it’s worth what you pay each year. If you are going to pay your balance off in full each month, you may want to choose a different card.

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Look for Special Rewards

Some cards offer travel miles and other benefits, but they may charge a higher interest rate. Choose these cards only if you know you’ll pay your balance off on time each month. Don’t accept special offers that you can’t use and be honest with yourself about your spending habits.

To help you break free of the debt associated with credit cards or other loans check out this useful calculator, and learn more about managing debt.

Remember: Credit cards don’t all work the same.Be sure to get the best deal you can and always try to repay what you borrow quickly.