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About Credit Cards

When is best to pay my credit card bill?

The most cost-effective way to use your credit card is to pay off the full balance by your statement date. This improves your credit rating, and in the case of most cards means that you won’t pay any interest.

Credit can cause major damage if it gets out of control. The average American household carries $16,000 in credit card debt, most of that at interest rates around 18% APR. If you are making only the minimum payment on that amount, you’ll pay over $2,000 in interest every month. Your debt will go from $16,000, to $18,000, to $20,000 and more, as the interest continues to go up with the debt.

However, if kept under control and used wisely, credit can be a very powerful financial tool. It’s true that having too much unsecured credit can look bad on your rating, but a healthy gap between your available credit and that which you owe – called your credit utilisation ratio – looks very good to lenders and credit agencies.

If you take your current balance, and divide it by your credit limit, you’ll get your credit utilisation ratio. It should be below 30%.

Why the exact date you pay your bill matters:

Since some card companies issue their reports to the credit bureaus once a month, the amount you owe on that day can determine how your credit looks for the whole of that month. If you can pay your credit card bill before the reporting date, your credit rating will look better.

You can call your credit card company’s helpline to ask when your credit activity is reported, and make sure to pay your balance before that date.

Can you ask for a lower rate on your credit card?

It seems strange, but simply asking for a lower rate often results in a “yes.” 69% of Americans who asked for a lower rate report getting one… but only about a quarter of American credit card holders bother to try. Give it a shot – it’s just a simple phone call.

If you’ve made a mistake and are charged a fee, it’s also worth calling to ask if it can be waived – especially if it is not a usual occurrence for you. People who are regularly reliable in paying the right amounts, one time, are often forgiven for a small error here and there.

Learn how to lower your credit card interest rates

If you call to negotiate a lower rate, here are five things to keep in mind.

First, don’t worry. The worst that can happen is they say no. Your rates won’t go up, there will be no adverse effects to your credit rating and no nasty notes left on your file. In fact, you’ll show them that you are a savvy customer, and that they’ll have to treat you well to keep you with them.

Second, point out your loyalty. If you’ve been with them a while, and are in good standing, point out that you are a low risk client who has been giving them your business for some time. Loyalty from good customers is valuable to a card company, and they’re usually pretty willing to repay it with good rates.

Third, know what you’re talking about. Find credit card offers with better rates than yours and ask to have your current card issuer match them. They’re more likely to do so if they know you are aware of a better rate from a competitor.

Fourth, don’t stop at the first person you talk to. If the first person gives you a “no,” politely ask to talk to a manager. It could be that a lower-level employee doesn’t have the authority to give you a better rate – but a manager might. They will also see that you are serious about wanting a better rate, and therefore more likely to go with a competitor if you can find a better deal elsewhere.

Fifth, don’t call just once. If you receive a “no” from the manager, wait a few months, make your payments on time, and then try again. Always be polite, and your persistence might pay off.

Should I have a zero balance on a credit card or close it completely?

Your credit score is made up of five factors. Your payment history, age, mix of credit, inquiries, and credit utilisation (which is a big one). Keeping a credit card with a limit of, say, $5,000, but no balance, gives you a boost to your overall credit utilisation (which includes all cards and lines of credit). If you close the card, however, your debt will not increase, but your available limit drops by $2,000. This can increase your utilisation ratio a lot. Since carrying a zero balance doesn’t cost you anything, it is better to keep it open.