Debt Help

How Interest Rates Work

When people hear the words ‘interest rates,’ the only thing that hits their head is how to decrease interest rates.  However, before you can decrease interest rates, you need to understand exactly how interest works.  The trick to interest is reading the fine print and trying to determine whether that loan has a fixed interest or a fluctuating interest.  Here’s how interest works:

• Whatever money you owe, if you have an APR of – arbitrarily speaking – 19%, that means that on whatever you owe, at the end of the year, you will have to pay back 19% of the total bill.  But, interest is collected monthly.  So, it’s dangerous because you’re paying SO much interest on a monthly payment that could be high already.  That’s how people get so caught up in debt.
• If your interest was 0% when you signed up for the credit card, the second that you miss a payment in full, interest might completely jump to a phenomenal number.  That’s the way credit cards make their money.  They’re banking on your failure to come true to your debt.  That’s why it’s so important NOT to get in debt.
• You can argue and try to decrease interest rates, especially with credit card companies, because they do want your business.  So, if you’re confident that you can continue to pay, call them up and say “9% doesn’t do it for me, drop me to 7%.”  If they want to keep you, they’ll do it.  They can afford to do it.  They can’t afford to lose you.

Interest is a tricky game.  Interest is tacked on and continues to be tacked on to whatever debt you have which is why it’s so hard to get OUT of debt.  But, if you work hard on it and really focus on it, getting out of debt does not need to be an impossible task.  It really can be as easy as cutting up your credit card and paying large chunks of money a month.  I hope this clears up how interest rates work.

How to Stop Pre Approved Credit Card Offers

For many who are in debt, you might find it weird that even though you are in debt with other credit companies, you continue to receive pre approved credit card offers in the mail.  Often times, these pre approved credit card offers are from companies that you have never heard of, yet they’d love to approve you for up to $5,000!

Whether or not there are benefits to such offers (and there’s aren’t many, if any) if you came to this page, you’d probably love to know how to get them to stop.  When I found out how, I was getting 4-5 pre approved offers a day!  It was filling up my mailbox and wasting my time since I had to make sure none of them were real cards I needed to shred.

If you are in debt, then having all of these extra credit cards is probably not the best idea.  In my debt reduction tips I talk about how you should cut up your credit cards, not add more to your collection.

So, anyhow, here’s how to stop pre approved credit card offers:

1) You can call 1-888-5-OPTOUT (1-888-567-8688) and they will guide you through the process of opting out.

or

2) You can go online to OptOutPreScreen.com and you can fill out a form online or print out and mail in a form.

I have not used the phone number, but when I used the website, I was able to choose between opting out for 5 years or opting out permanently.  I chose to opt out permanently because I didn’t want to have to go through the process to stop the pre approved credit card offers anymore.

Also, it’s not a fact, but I have heard that it can increase your credit score a little bit, since it is seen as less of a risk if you aren’t receiving those offers anymore.  Whether or not it does increase your credit score, it definitely can’t hurt you!

Best Way to Lower Your Credit Card Interest Rates

Many people who are in debt search and wonder how they can get their credit card rates lowered, especially if they have cards with very high interest rates. Whether your goal is to reduce your debt, lower your monthly payment, or maybe even consolidate your credit cards, everyone would be happy with paying lower interest rates.

I recently missed a credit card payment, not because I didn’t have the money, but because I just forgot. (How many people have been in that position?) They called me the day after it was due, I explained the situation, and paid the money immediately. They didn’t care. My credit card interest rate went from 12.99% to 28.99% and my monthly payment increased by 66%! When you make a budget and are trying to stick to it while trying to pay off your debt, such an increase is brutal, let alone the amount of my monthly payment being applied to the principle was much lower. Can you feel the struggle?

So, I called them, explained the situation while apologizing for missing the payment. I told them that I had gone two and a half years without a missed payment and that I paid as soon as they told me about the overdue payment. That didn’t work. They said it would be about a year until they could lower my credit card interest rates.

So, I just gave up. A month or so later, I was telling my co-worker about it and she encouraged me to keep calling the credit company, and I’ll finally get someone who will lower my credit card interest rate. I didn’t believe her and I didn’t really try it. The next week, she asked if I called, and I told her I didn’t because it probably wouldn’t work, but she kept pushing that I should call… so I did.

And I only called once, and the lady I spoke with lowered my credit card’s interest rate! Not only did she lower my interest rate, but she made it lower than it was BEFORE I missed a payment (10.99%… a whole percent lower!). Plus, she refunded my late payment fee and the extra interest I paid in that month or so that it was at the higher rate! Can you feel the relief that I felt? I would have been happy with 23%, 19%, or 16%… anything lower than 28.99%!

Long story short… keep calling. You will get someone who is willing and able to help you reduce your credit card interest rate, especially if it’s a high rate. Don’t give up… if you have to wait a week and try again, do it! You won’t regret it!