Credit cards are one of the most pervasive forms of your financial picture. On a daily basis, they provide the flexibility and freedom to reserve a hotel room, travel without carrying cash, and purchase just about anything at anytime.
As such, your credit cards can have a major impact on your financial wellbeing and even your credit score. But did you know that your credit score can also impact your credit cards...specifically your interest rates? Although some companies have abandoned the practice, many won't hesitate to raise your interest rate if your credit score declines - even if you are paying them on time! By following these tips, you can help avoid inflated interest rates on your credit cards...and perhaps even enjoy more trips to the ballpark:
Understand the terms. The best way to protect yourself from high interest rates and hikes is to read and understand your credit cards policy terms. Pay particular attention to the interest rate, how long that rate is in effect, and what actions can lead to a hike - such as a late payment on your card, a declining credit score, or even a late payment on a completely unrelated bill.
Don't be late. Making a late payment can lead to increased interest rates on all your cards. In addition, they can lower your credit score, causing you even more problems down the road. So make a schedule and always pay on time.
Watch the mail. We all get junk mail, but some of it may not be junk after all. Whenever you receive any information in the mail from your credit card, read it carefully in case any policies or interest rates are changing.
Make a call. If your rate does change, call the company. If you've made your payments on time consistently, you may be able to get your original rate restored. If the company seems hesitant, you may want to threaten to transfer your balances to another card - customers in good standing may find they have more bargaining power than they realize. And don't just threaten to make a change...actually do it if it makes sense. You may find the grass actually is greener on the other side.
Be careful what you close. Closing a card that has a current balance will likely send your interest rate soaring. In addition, closing your oldest credit cards can have a negative impact on your overall credit score.
So make sure you check and double check which cards are best to close.