Top Ten Ways to Save Credit Card Interest and Fees
1. Never ever miss a payment deadline.
Mark down the payment deadline on your calendar.You will be slapped with a late payment fee and additional interest charges on top of what the card issuer is charging you.
If you have several cards and keeping track of payment is a chore, then setup your card to auto debit the checking or savings account.
If you send your payment by post, send it out early to avoid unforeseen delays.
Besides the unnecessary charges, you also get a “black mark” on your credit report. This could negatively impact your credit rating and therefore causes the rates on your other credit facilities to go up.
2. Do not get a cash advance.
You are charged interest from the day you take a cash advance.First, you are charged a processing fee.
Second, you start paying interest immediately on the cash advance.
Third, the interest rate on cash advance could be higher than the interest rate on your normal purchase.
Lastly, your repayment goes to paying off all the other balances first before being offset against your cash advance, resulting in high interest charges if you don’t pay off the balance in full.
3. Pay off the balance in full, every month.
If you can afford, then pay off the balance in full every month. If you can’t afford, then don’t make the purchase at all. Save until you have enough of money then make the purchase.
If you have made a purchase because of an emergency and you cannot pay it off in full, then see if you can convert this purchase into an interest free installment payment scheme. Check if the savings in interest justify the processing fee.
4. Take advantage of interest free balance transfer.
I took about one year to pay off my huge credit card balance. I took advantage of the interest free balance transfer by the different card issuers. Hence, I saved on thousands of dollars on interest charges.
5. Pay more than the minimum payment.
What if you:
- can’t afford to pay off the balance in full,
- can’t convert the balance into an interest free installment payment scheme, and
- are unable to get an interest free balance transfer offer.
Your best bet is to pay down the balance as much as you can afford. You will save on hundreds or thousands of dollars in interest charges.
6. Choose a card that suits you.
Choosing the right credit card will set you on the right track on saving interest charges.
If you always pay the balance in full, then a cash back card is more suitable for you.
If you always have some balance hanging in your card, then choosing a card with a lower interest rate will save you thousands in the long term.
If you are eliminating your debt, then choose a card which offers an interest free period for balance transfer.
7. Negotiate for a cheaper rate.
A lower interest rate could save you thousands in interest charges over the long term.If you have been paying on time for a year or more then it is time for you to negotiate for a better interest rate.
You shop around for a card with a lower interest rate. Then you call your card issuer and tell them you want to cancel your card because you’ve been offered a card with lower interest rate. Tell them the rate you are offered. Your card issuer will be willing to match the offer and lower your interest rate.
8. Avoid add-ons.
Oftentimes, your card issuer will offer optional services and products such as travel insurance, life insurance, theft insurance and so on. These are a waste of money.
9. Waive fees.
Waive late payment fee, annual fees on the principal and supplementary cards. All you need to do is make a call to your card issuer and requests that these fees be waived or reversed. Usually they will comply. If they don’t, then cancel your cards and take your business elsewhere.
Throughout so many years, I have never failed to get my late payment fee and annual fee waived.
10. Reconcile your statement.
Keep receipts on all your purchases. Reconcile these with your statement when it arrives. Though rare, but there have been cases where cardholders were billed twice for one purchase.