Understand Credit Card Interest and Get Better Terms

Understand Credit Card Interest and Get Better Terms

We talk a lot about budgets. We promote wise spending, as well as making fruitful investments. When it all boils down, a lot of our financial maneuvers depend on our creditworthiness. Is there a way to master a revolving balance? Can we better understand credit card interest to obtain more beneficial terms?

The answer is YES. The more you know about credit scores, balance transfers, and APRs, the more you can use them to your advantage. In a timeframe as short as six months, smart consumers can reduce their credit card interest significantly. What do they know that others don’t? Continue reading to find out.

What is a FICO credit score?

A FICO credit score is a 3-digit number calculated from data present on an Equifax, Experian, or TransUnion credit report. After interpreting the data, each person applying for credit, or wishing to borrow money, receives their score. Depending on the leniency of the lending service, they will either approve or deny a request based on the FICO number.

How FICO scores affect credit card interest 

In general, a person with a good credit score can expect to receive a lower APR. Creditors perceive them as less risky and reward them with better terms. Regardless of where someone may fall the credit scale, they still have options in regards to financing. 

For instance, a person with a low FICO score can work to improve their credit and refinance later. After going non-default for at least six months, they can seek out balance transfer promotions with a separate lender to lower their credit card interest rate.

Interesting credit card facts

1. A credit card company sets limits on how much you can charge on your card. They also set your APR.

2. Paying the minimum monthly payment will keep you in debt longer than paying above the suggested amount.

3. Avoid paying interest on your credit card purchases by paying the full balance before each billing cycle. 

4. There are cards with cash back incentives, some as high as 1.5%.

5. Transferring balances to a card with a lower APR will reduce monthly interest payments.

Check your credit card statement 

Only 39% of Americans with credit card balances know their APR. Instead, we urge you to review your statement often. If you’re not happy with your current rates, make the switch. Let Achieva Credit Union help you transfer your existing credit card balances with no fee. We offer a low introductory rate on balance transfers without the annual surcharge. You can review more about our Achieva Cash Rewards Mastercard here.

Now that you know the ins and outs of credit card interest, you can use the information to your benefit. After doing a little research, you’ll see that a GOOD rate is not hard to find.

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