Credit cards are an indispensable ally in enriching financial lives, but do you know they can also throw you into the pit of crippling debt if not managed carefully.

According to the Consumer Financial Protection Bureau, credit interest rates are rising with each passing year, and the Federal Reserve recorded an all-time high in interest rates in 2023. 

So, what is the best strategy to avoid credit card interest? This blog will walk you through all the tested and proven methods like calculating credit card debt to lowering the APR. Read it to learn how to avoid and reduce credit interest. Keep on reading! 

5 Ways to Avoid Interest on Credit Cards

Credit card debt is detrimental to both your financial and mental health. Fortunately, there are a few workarounds that can help you avoid interest charges. 

Here’s how to avoid interest on credit cards: 

Pay Credit Card Bill in Full

Many card issuers charge interest for a few days between the end of the cycle and the first billing day. If you pay the balance in that duration, no interest will be accrued. This grace period buys you some time while you work on clearing all the outstanding bills. 

No interest rate can bother you if you build a habit of repaying the credit bill in full each month. However, if you take cash advance or pay in half due to sudden expenses, be sure to strategize your repayment plan to avoid high debt. 

According to CFPB, every credit card company offers a grace period of at least 21 days to the consumers. 

Use Budgeting Tools 

You know how important budgeting is to creating stability, and fortunately, you no longer need to run to financial advisors and spend extra to prepare a financial plan. 

Budgeting and finance tracking apps empower consumers to build a future-ready system. You can track your expenses, review your savings, check out your investment portfolio, and take real-time measures to avoid or pay off debts. Use these apps to calculate and design a framework for credit repayment. 

Consolidate Debt with Balance Transfer Credit Cards 

If you are currently carrying credit card debt, moving the amount to balance transfer credit cards can be your best resort. When you have a no-APR credit card or card with an intro offer, what you can do is transfer the outstanding balance of one card to another to take advantage of the interest-free period. 

This way, the interest will stop accruing, and you will get some time to pay off the amount. Please keep in mind that not every issuer and card supports balance transfer. Moreover, the companies charge an upfront fee to carry out the procedure. 

Make Strategies for Big Purchases 

Are you planning on making a car down payment with your credit card or want to make a major purchase? You must take note of your budget while financing major expenses, as you’ll be liable to pay fees and interest on the withdrawn amount. 

Here are some smart moves to save money:

  • Choose the Buy Now, Pay Later option to break down bigger amounts into a series of smaller monthly payments. 
  • Make bigger purchases with no interest-bearing credit cards to avoid paying extra. 
  • Use rewards credit cards to match the cash back and redeemable points with the total spending. 

Make Use of 0% APR Period 

Many companies give interest-free intro period to new cardholders and the best part is, this offer can even be extended for a longer term for purchases. You must make transactions wisely and can even go for expensive purchases that sit within your budget. 

Simply put, you can shop, dine, travel, and spend with your credit card and no fees or interest will be charged as long as you pay the bill on time. 

This was about how to stop interest charges on credit cards. Note that the success rate of avoiding interest also depends on your issue and type of card. If you are unable to avoid credit interest completely, there are still ways to reduce it. Let’s discuss it in the coming section. 

5 Ways to Reduce Interest on Credit Cards

Well, if you can not fully avoid interest charges, you can still cut short the accrued interest to get some relaxation. Here are the time-tested methods to help you out:

Take a Loan to Consolidate Credit Debt 

Credit cards charge the highest interest among all the financial instruments. If you are burdened with a high rate of interest, you can take a personal loan from banks or private lenders like Minto Money and consolidate your credit debt. 

The average rate of interest on personal loans in the USA is approximately 12%, which is far lower than credit interest. The extra benefits will be a fixed monthly amount and a fixed tenure to pay off the loan. 

Make sure to do your research, estimate monthly repayments with the personal loan calculator, and read the fine print carefully. 

Know About Repayment Plans 

Many credit card companies offer a repayment plan that helps cardholders to avoid interest. What happens here is the issuer sets a spending limit and charges a plan fee from you in exchange for the interest-free period. 

You can review different interest-free repayment plans of your issuer and enjoy credit transactions without having to worry about accruing interest. Just make sure to understand the plan fees, terms and conditions, and other charges associated with it. 

Pull Out Your Savings 

You can try using your savings account to pay off credit card debt. Although this technique may appear contradictory if you’re trying to save money to achieve a certain financial goal. However, the difference in interest rates between what you can earn and what you pay is so large that using savings to pay down debt may make excellent practical sense.

Make Multiple Payments Each Month 

Well, you aren’t obligated to wait until the end of a billing cycle to make credit repayments. Cardholders can make payments at any time, which will help lessen the amount of interest. This is because the interest you’ll pay is dependent on your average daily credit card amount, rather than the total sum at the end of a billing cycle.

Make sure to pay multiple times per month to keep the average daily balance low, which reduces your interest.

Use Debt Repayment Strategy  

Getting completely rid of debt gets difficult, especially if you are paying off many bills at the same time. However, there are debt management strategies that will keep you on the right path. You can give a try to debt avalanches, refinancing, and debt consolidation methods. 

The motive of all these methods is to list all your debts, arranged from highest to lowest interest rate, and figure out ways to repay them based on your total income.

So these are the methods you can follow to reduce your interest charges on credit cards. 

How to Lower Credit Card APR?

While your priority should always be completely cutting off interest rates, you must take advantage of every opportunity you get to lower your APR. Here are a few steps to take:

  • Talk to Your Card Issuer: Many credit issuers provide opportunities where consumers can work to lower their APR. You can reach out to the customer department and ask them to reduce the interest on your card. 
  • Work on Your FICO Score: Your score plays a significant factor in determining your interest rate. Whatever card you have currently, try to use it within your means and pay the bills on time to build a better credit record.

    The higher the FICO score, the lower the APR, and vice versa. So, follow credit-building steps to build a fine financial record and as a result, you’ll get qualified for the best zero to low-interest rate cards. 

  • Get a New Card: If you’re not satisfied with the interest rate and charges of your current card, you can find other cards in the market with low APR. Instead of going for traditional cards, you can even try out private cards like Destiny credit cards, which are authorized by credit unions. 

Well, this was all about how to avoid credit card interest. We hope this blog has given some valuable insights and will help you manage the credit effectively. Just make certain to plan out your spending and repayment ahead of time and utilize the 0% interest period. 

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Frequently Asked Questions 

Ans: You should pay the balance in full every month before the last day of payment.

Ans: You must be strategic about making big purchases and never transfer the balance from one month to another.

Ans: You can request a grace period from your issuer to avoid paying interest over the balance.