How does the balance on credit cards affect interest?

interest affected by a credit card balance With record unemployment and a stagnating economy, it is hardly a surprise that consumers are carrying significant balances on their credit cards. According to EconomyWatch, each consumer carries an average of $5,100 in credit card debt. Depending on various factors such as FICO scores, payment history among others, any balance on a credit card is likely to push interest rates up and add to credit card debt.

To find a credit card with a rate you like, or a low-fee balance transfer card, use the FREE credit card finder and reduce your balance to zero!

Having a balance on your credit card account exposes you to higher interest rates, fees and any other forms of penalties that your bank and credit card company deem applicable. So reducing your credit card debt down as quickly as possible makes sound financial sense.

What can you do to reduce your credit card balance and lower your interest rates?

Reducing your credit card debt requires planning and financial discipline. Some of the major steps towards lowering your credit card balance are as follows:

You must exercise self-restraint and stop getting into further credit card debt. Try to limit the use of your credit card to emergencies only.
Set a budget for yourself that will allocate your funds in a systematic way.
Try to consolidate your credit card debt onto fewer low interest rate credit cards that also offer low balance transfer fees.
Since your APR determines your monthly credit card bill, try to negotiate with your credit card company or bank for a lower credit card interest rate.
Avoid taking out any cash advances since typically such services are expensive and your loan is charged at a higher APR.
Try to make the maximum amount of payment each month toward your credit card balances. As your balances reduce, you save money on the amount of interest you pay to your credit card company or bank.

Taking such prudent financial steps will substantially reduce your credit card balance and help you enjoy the advantages of having good credit history.

How can setting a budget help reduce the balance on your credit cards?

Budget planning can seem like an overwhelming task. Sometimes you avoid crunching the numbers just to keep the reality of debt at bay. But calculating your income and expenses is of utmost importance in your project of debt reduction. Remember to list all your expenses, including clothing, entertainment, gift giving, and travel among others.

The intent is to find expenses that can be reduced or eliminated. This will free up money that can be used to pay towards your credit card balance.

What should you do with your existing credit cards?

It is very important to know exactly how many credit cards you have and use, as well as the associated terms and conditions.

Make a list of all your credit cards along with details such as credit card limit, the balances on each card, your the APR rate on your credit card, late fees and penalties, and your minimum monthly payment.

Once you have your list ready, call every bank and credit card company. Talk to them politely and with perseverance to get a reduced credit card APR. It is likely that your lenders will cooperate with you and lower your credit card rate.

Once that is done, target your credit card with the highest APR and get the balance down to nil as soon as possible while continuing to make minimum payments on your other credit cards. Once the credit card with the highest APR is paid off, go to the second highest APR credit card and so on.

What else can you do to reduce balance on my credit card?

According to Yahoo!Finance, credit card usage was up 10.6% in 2011 and the financial pundits see this trend continuing. In other words, you will see more credit card offers with enticing terms.

So look out for new credit cards with favorable terms such as zero introductory APR and low balance transfer fees. Make your calculations to see if such steps of balance consolidation will help your lower your balance more effectively.

The focus is to eliminate all your payment balances on your credit cards. This will help you improve your credit score, negotiate better interest rates in the future as well as lower or eliminate other fees and penalties associated with high credit card balances.

So explore different offers to consolidate your credit card debt while being wary of piling on any new charges on your shiny new credit card.

How can you get credit cards that will lower your balance and positively affect interest rates?

With the rising popularity of credit cards and new credit card offers becoming more easily available, this is a great time to work with your credit card company or bank towards lower credit card interest rates, fees, and penalties.

If you need to locate a credit card with interest rates or better balance transfer terms, use the FREE credit chaser tool and take your first step towards being debt free!