How To Avoid High Credit Card Rates… Part Two

In Part One, we've concluded that there were two types of credit card customers. One is machine guns or those who pay their balance off by the end of the month. The other is revolvers or those who pay only the minimum balance each month. We explored the two and determined which was the wise way to handle finances. Readers also learned how zero rate credit cards could help or hurt your finances. In this installment, you'll see other ways how to avoid high credit card rates...

Reasons Behind High Interest Rates

There can be several reasons why credit card interest rates can increase. One can only take a look at their previous statement to come to a conclusion. Many times, people think that credit card companies are just picking on them when in fact they simply want to be paid for offering their services. Who wouldn't want to collect money after letting someone borrow their money to pay for products they will never see. Here are two examples of why credit card companies charge higher interest rates for some people than others:

· Late payment on existing card - Basically, the rule is quite simple! Pay the bill on time. This is an issue that's been carried down for generations. Simply put, you're breaking the stipulations of your credit card if you pay late. It gets worse when you factor in the fees associated with paying late. There are some companies who may charge $30 or higher each month that the bill arrives late. To them, it looks as though you're trying to "rob" them. To penalize, they increase the interest rate if this happens repeatedly. If the credit card disclosure stipulates the bill needs to be paid at a certain time, then you better believe that there will be consequences when this isn't met. Worse, the credit card issuer reports the activity associated with the card you're carrying to the three main credit bureaus, Experian, TransUnion, and Equifax. This will in turn hurt your credit score.

· Non-payment on other bills - Equally as deadly, not paying on other bills will cause your interest rate to increase the same. Remember the three credit bureaus? Not only credit card issuers report to them but other companies such as utility, mortgage loan, and even cellular phone providers report also. For example, let's say John decided to move out of his apartment. However, he didn't pay the rest of the balance off from his telephone provider. The telephone provider will then give a report to one of the three credit bureaus. This results in a negative report and will be reflected on his credit report should he want to move into a house or apply for other credit. Later on, when he want to apply for a credit card, the issuer will read over his credit report and make a decision as to what rate he will qualify for.

If you find that your interest rate on your credit card has risen, first investigate into why it increased. Sometimes, it can be because of a company deciding to change their policy. Or it could mean that you're guilty of one of the above infractions. In this scenario, it may be wise to think about transferring the balance to a card with a lower interest rate and change how you handle the balance on your credit card.