Tips For Lowering The Cost Of Your Credit Card | Refresh Financial

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Tips For Lowering The Cost Of Your Credit Card

 Tips For Lowering The Cost Of Your Credit Card

Credit cards cost you in interest, annual fees, and other hidden fees, but they're also an integral part of building credit. If you're a credit card holder, you already know that interest is what gets you. Let your balance get too high, and all of a sudden your interest charges are through the roof. Paying on time doesn't seem to get you any closer to shrinking your credit card debt. It feels like you'll be paying this debt off forever and still only be barely tackling the interest. We've created a short list of tips for lowering the cost of your credit card, so you be free to use your card without it costing you an arm and a leg.

1. Choose The Right Card

Try and find a card that has a lower interest rate, or at the least, doesn't have an annual fee. If your credit score is damaged and you only have access to higher interest rates, then the rest of these tips will be that much more important. Transfer the balance from any high-interest cards to the low-interest card. Depending on the size of your balance, you could potentially save yourself a ton of money this way. Did you know, Refresh offers one of the lowest interest rate credit cards available? Check it out!

2. Don't Carry A Balance

Avoid paying interest altogether by paying off your entire balance each month before the grace period ends. Of course, this means you can only spend what you can afford on your credit card, but it's a great way to avoid getting caught in a vicious debt-cycle where you're paying those high-interest fees. If you can't pay it off in full, it's important to try and pay it off as fast as possible. Put everything you can afford towards this debt. Keep in mind, that if your balance is paid off in full each month, it won't really matter what your interest rate is.

3. Pay More Than The Minimum

If you carry a balance on your credit card, you have to make monthly payments based on it. These monthly payments are how credit card companies make money. If you stick to your minimum monthly payments, the amount of interest you pay is going to be much more than it needs to be. It makes the issuer happy, but it's no good for your bank account. If you're unable to pay down your entire balance every month, at least make sure you're contributing more than just the minimum payment obligation to ensure you're minimizing the interest you pay. The more you pay towards your balance, the more you'll save on interest, not to mention it's also great for your credit score.

4. Don't Use Cash Advances

The cash advance feature on a credit card allows you to withdraw cash from an ATM against your available credit. It might sound tempting, but we advise that you refrain from using this feature. The interest rate is much higher compared to regular purchases, plus there is no grace period. This means interest will begin accumulating immediately. If you're not careful, this is one of the fastest ways to fall into debt.

5. Watch Your Statement For New Or Hidden Fees

If you know what you're going to get charged for, you can avoid incurring extra fees on your credit card. You will be charged interest on the fees unless you pay them off right away, so familiarizing yourself with which fees get charged when can help you devise a plan to pay less interest. Always keep an eye on your credit card statement and never be afraid to ask questions when you see something you don’t understand.

As with most things, use your new credit card in moderation and with responsibility. Your credit card should serve as a tool that builds your credit score and provides ease and convenience. It's not designed to bury you under overwhelming debt.

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