Everyone dreams about a credit card APRof zero interest or low interest. With no fees. Come on, you know you do. But getting the best interest rates and the lowest fees is a privilege reserved for the elite with high credit scores. So, is there ever a time when having a high interest credit card, or a card with high fees, is worth it? Well, we can think of three.
Having a credit card, as long as you use it responsibly and don’t have too many of them, can help you build or rebuild your credit. That’s pretty important. When you have a better score you can get, well, better rates on future cards. But also on mortgages, cars and more. So paying a little higher interest now might be worth it to improve your credit in the long run.
Today, many credit cards – even those with high interest and fees – offer you cash back rewards. Sometimes those rewards are just 1%, not a huge incentive if you are paying 14% interest. But sometimes these rewards and rebates can be up to 5%. If you need to build your credit and a high interest card is the best you can do right now then at least a good rewards program might help you to recoup some of those interest fees. The same is true of credit card airline miles with no annual fee – even if you pay interest it may be worth it if you rack up a lot of miles and you are a heavy traveler. You may want to consider those cash back credit card offers and airline mile cards!
If your credit is not that great and you are stuck with a high interest card, take heart. While it starts out high you may be able to upgrade to a lower interest card after a few months or a year. Use your card well, build your credit, and then apply for a better, low interest card.
If you are stuck with a credit card APR that is high interest or high fees don’t be discouraged. Here are two ways to make the most of it:
If you have a high interest credit card then keep your balance low so that you don’t pay much interest. And remember, you only pay interest if you have a balance on your card after the grace period on new purchases expires. So, pay the balance off in full each month and you won’t pay a penny in interest.
Sometimes you can negotiate a lower credit card APR rate on your current card. Really. If you’ve been a good customer, paying on time, staying under your credit limit, call your credit card company and ask them to lower your interest rate. Many times they will do it – all it costs you to try is a 10 minute phone call. While you are at it, remember that many credit card companies will also remove late fees and other fees, at least once a year, if you call and ask. Always be polite, ask very specifically for what you want, and sometimes you will find the old adage is true, “Ask and ye shall receive.”
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