Back before the recession, I remember the standard interest rate on my American Express card was the only the prime rate. At the time that was (and still is) 3.25% so that’s all I had to pay if I ever carried a balance. Keep in mind this wasn’t a promotional rate, but rather my standard APR.
However the recession changed all that. Nowadays, it is impossible to find a credit card that has a standard APR that low. That same credit card today charges the prime rate + 8.99% (12.24%) for its absolute lowest APR bracket… that’s over three times higher than it was in the past!
Are low rates possible in 2012?
The lowest non-promotional rate you will find on a credit card today will be 10% or so, sometimes a couple points less if you’re lucky. However you need to have the absolute best credit to get those rates. Most people will be stuck paying 14% to 17% or more.
That being said, there are still a few tricks you can pull to get a lower APR on your credit card. Here are what I consider to be the best three tips.
Method #1: Using multiple balance transfers
The drawback with balance transfers is that you only get the low rate temporarily. However, there’s nothing that says you can’t transfer that balance again when your promotion ends.
If you have a large amount of credit card debt and think it will take a couple years to pay off, then one strategy is to continuously transfer it around to take advantage of the 0% promotions. For example, you might transfer it to a 0% offer good for 12 months and then when the time is up, transfer it again to another offer for 18 months, etc. You just keep doing this until you have it paid off.
Really the only drawback with this approach is that most banks charge a balance transfer fee of 3-5%. So even though you get 0% interest, you still have to pay that 3-5% fee each time you transfer. However on occasion a couple cards have came with no balance transfer fee promotions. For example, the Chase Slate was running this type of deal last I checked.
Method #2: Pit banks against each other
Some healthy competition between your card issuers is a good way to score a better rate.
In a nutshell, if you have a lower rate on one of your cards, you should call up the customer service for your other cards and ask them to match it. For example, if my Chase Slate card has a standard APR of 11.99% then I might call up Citi and Chase and say “Hey, my Slate card is giving me 11.99% but you guys are charging me 14.99%. Can you beat what Chase is giving me?”
If you are serious about ditching a card because you’re rate is too high, often times the bank will consider lowering it or at least matching it to the rate you are paying elsewhere. This doesn’t always work, but it’s worth a shot.
Method #3: Go with a credit union
Credit unions typically don’t offer very good 0% balance transfer offers, but when it comes to a card’s standard APR, usually they have the best deals.
Most of the credit card websites (including my own) don’t advertise credit unions, so you will have to probably look outside the box to find the ones with the lowest rate credit cards. Just do a Google search for “credit unions” and you will find several websites online which let you search for ones in your area.