Last week we posted about a strategy on how to pay your balances to lift your credit score by the maximum points even by only paying a fraction of your balances. This week lets discuss the consumer that does not care so much about their credit score but would rather want to save the most money on interest.
Every Account Has A Different Interest Rate
The first thing you should know is that every one of your accounts has a different interest rate. Interest rates can vary from 12.99% annually all the way up to 29.99% annually. To start, go through your accounts and create a list of each one of your accounts and their interest rates.
You can find the interest rate for each account on the monthly statements
The Banks May Negotiate Interests Rates
Now that you have the interest rates in front of you, you can get onto the phone and try to get those rate numbers down. Call the banks associated with your credit accounts to negotiate better interest rates. Some banks, such as Citi and Discover, can give you a better interest rate just by asking. It’s worth the try!
A Second Look at Your Interest Rates Will Do
If you were successful at bringing the interest rate down, add it to your list. Now is the time to go through your list again. Note the balance and interest rate for each account.
It’s The Rate That Counts, Not The Balance
Being that we are want to save on interest now, here comes the last part of the strategy. Pay up the balances which have the highest interest rates.
All this may sound very simple but often people for whatever reason don’t get it. Instead of paying the balances with the highest interest rate, they pay the balance on an “eeny meeny miny moe” strategy which obviously doesn’t make sense.
Good luck on knocking down your balances.