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7 Ways to Save on Credit Card Interest

High interest rates can make carrying a credit card balance costly. Fortunately, there are ways to save on credit card interest as you pay your balance.

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With credit card interest rates at record highs, you can easily end up spending thousands of dollars on finance charges each year. Here are some strategies to help you save on credit card interest.

1. Pay your full balance during the grace period.

Each billing cycle, and depending on your card issuer, you may have a period of about 21 days to pay your full statement balance and avoid interest charges on your purchases.

This grace period applies as long as your previous month's balance was paid in full. If any part of your balance was left unpaid, the grace period doesn't apply. Fortunately, the other tips included here can help you save on credit card interest in the future.

2. Pay more than the minimum.

The higher your balance, the more interest you'll pay. When you only pay the minimum, most of your payment goes toward interest with only a small amount reducing your balance. Making larger monthly payments lowers your balance more and reduces the amount of interest calculated on your balance.

3. Transfer your balance to a card with a lower interest rate.

You can save on credit card interest by moving high-interest rate balances to a credit card with a lower interest rate. Even better if you qualify for a promotional 0% APR offer.

Many balance transfer cards offer this promotional rate for 18 to 21 months, which gives you ample time to pay down your balance and avoid interest. Be sure to factor in the balance transfer fee and any annual fee on the credit card as these can offset your interest savings if they're especially high.

4. Ask for a lower interest rate.

Your credit card issuer may be willing to give you a lower interest rate, especially if your credit has improved since card opening. You may not have luck with lowering your interest rate, however, if you are paying the penalty rate because of previous past due payments.

5. Make your payment early in the billing cycle.

You can save on credit card interest just by making your payment earlier when your credit card uses the average daily balance method to calculate your interest rate. By paying early, you reduce your average daily balance and the amount of interest that accrues— assuming you don't increase your balance with additional purchases later in the month.

6. Avoid cash advances.

Cash advances have a much higher APR compared to purchases and do not have a grace period for paying your full balance and avoiding interest. So any cash advance you take out starts accruing interest right away. Avoiding cash advances completely allows you to save on credit card interest.

7. Improve your FICO® Score.

Your credit card interest rate is often based, in part, on your creditworthiness, which is typically determined by analyzing the same information used to calculate your FICO® Score. By improving your credit, you can qualify for lower credit card rates and promotional APR offers. Both give you the opportunity to save on credit card interest.

Get your FICO® Score from FICO, for free. No credit card required.

Image of LaToya Irby, financial writer with 14+ years of experience.

LaToya Irby

LaToya Irby is a financial writer with over 14 years of experience. She's been quoted and published as a credit expert in several major publications including USA Today, U.S. News and World Report, TheBalance.com, and The Chicago Tribune.

Estimate your FICO® Score range

Answer 10 easy questions to get a free estimate of your FICO® Score range

Estimate for Free

Get your FICO® Score for free

90% of top lenders use FICO® Scores

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