How to get the best credit card rate

Ebony, April, 2005

FOR millions of Americans, winning the battle against credit cards (and the interest rates that define them) can be the difference between long-term debt and newfound savings. But with a lower interest rate, credit card debt can not only be manageable, but at times--profitable.

"Whatever methods you use to tame your plastic monsters, your money will go further and you'll be out of debt faster if you can get a lower interest rate," says Marc Eisenson, Gerri Detweiler and Nancy Castleman, co-authors of Invest in Yourself: Six Secrets to a Rich Life. "So, it's smart to invest the time to get the lowest rates you can, and then to consolidate your highest-interest debts to save more."

To jump-start your savings, take the following crash course in consumer advocacy and get rock-bottom rates before they get you.

Do Your Research. The Internet offers a wealth of information on the lowest rates, newest programs and tips to get your credit in order. Take the time to compare offers, programs, terms and fees before you sign on the dotted line.

Call the Customer Service Number for Each Card. You may be able to negotiate a lower rate if one bank knows that you've been offered a lower rate by another bank. "The credit card business is an extremely competitive one," says David Bach, author of Start Late, Finish Rich. Credit card companies need you just as much as you need them--if not more.

Beware of Interest Rate Scams and Fees. Excessive fees and buried clauses may be hidden within some plans, which may actually result in more payments for you in the long run. "Credit card companies can pull many tricks when they are trying to get their hands deeper into your pockets," says Jesse Brown, author of Investing in the Dream. "Some use a particularly vile ploy called 'two-cycle' billing that lets them assess new interest charges based on what you owed the previous month, even if you paid off that bill. If you see the term 'two-cycle billing' in your agreement, throw the card into the nearest fire."

Transfer High Rate Debt. Consumers receive more than 3 billion solicitations per year from credit card companies offering "teaser rates," which are low interest rates for certain introductory periods. "Assuming you can get a card with a low teaser rate, you'll save the most by transferring debt to another teaser card before your current rate expires, and then doing the same again and again, until you're out from under," say Invest in Yourself authors Eisenson, Detweiler and Castleman.

Read the Fine Print on Special Offers. Many card companies offer special introductory deals, vacation packages, frequent flyer programs and other incentives to attract new customers. "Their offers can be enticing, but before you jump into a deal that has you paying an annual fee and a 28 percent APR just to get a free tank of gas every six months, think carefully," says Brown, author of Pay Yourself First.

Join a Credit Union. If you don't already belong to one, consider joining a credit union. Since credit unions exist solely to serve their member-owners, you can be assured of favorable rates on your savings investments and competitively priced, low interest rates on credit cards. The not-for-profit status of credit unions enables them to operate at a lower cost than many for-profit institutions.

Nowadays, credit card offers are a dime a dozen, so it's not a matter of getting a good card, but the best card and the best rate to fit your financial picture. So, arm yourself with the facts, choose wisely and make the rate game work for you.