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"Ways to cut back on credit card interest"

By admin | May 7th, 2010 | Featured

Many credit card users in the UK will know just how crippling the cost of paying interest on an outstanding balance can be, and even though the Bank of England base rate has been at an all time low of 0.5 percent for a year now the interest rates on many credit cards seem to just keep on rising.

For many that are unable to clear their balance in full each month this means making huge interest payments each month, and this can really impact on the amount that you end up paying on your borrowing.

As if things aren’t bad enough already for millions of people following the recession and the global credit crisis credit card companies are making things even worse by demanding extortionate amounts of interest from borrowers, which for many could end up tipping them over the financial edge. Furthermore, reports have shown whilst the base rate is at rock bottom many credit card companies are not only charging extortionate rates of interest on borrowing but are even increasing the amount of interest being charged.

In fact, recent figures have shown that average credit card interest rates are now at the highest level in over a decade, and many people are both concerned and outraged at the huge gap that now lies between the average rate of interest on credit cards and the Bank of England base rate. An alarming number of people, despite their anger over this situation, seem to just sit back and take it, paying the credit card fat cats huge sums of money in interest, but there are certain measures that can be taken to try and reduce the amount of interest that you are paying on your credit card debt.

One option for those with high interest credit cards that have outstanding balances is to transfer the debt from these credit cards onto one interest free balance transfer card. By doing this the borrower can enjoy a long period of interest free credit on the transferred balance, and as long as the balance is paid off within the interest free period no interest will be charged.

Doing this means that you can clear your balance more quickly and save a fortune in interest.

For those that need a longer period of time to repay the balance than the interest free cards offer there are life of balance transfer cards, which allow the borrower to enjoy a very low rate of interest on the transferred balance for the life of the balance providing at least minimum repayments are maintained each month.

Consolidation loans could also be an effective solution for some credit card holders, as low rate consolidation loan could allow you to pay off all of your higher interest credit cards and just have one lower repayment to deal with each month.

Another option for those that are not afraid to confront their credit card company is to contact the lender and demand to know why the interest rate on the card has been increased. The lender is obliged to justify this and those that cannot have been known to reduce the rate again for customers that have actually phoned them and confronted them.

Tags: credit card, interest rates, Credit card balance transfer, Bank of england, interest

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