Rate reduction - Statistical Data Included

Black Enterprise, Sept, 2000 by Kelli D. Herd

Even though the Fed has raised rates, you can find the best deals for your credit cards

Here's a dicey scenario: You've maxed out your credit cards, and learn the Fed has hiked interest rates another 50 basis points. Effectively, the annual percentage rate (APB) on your card has jumped to a whopping 17.04%. Well, don't panic just yet. There are steps you can take to manage and, yes, even eliminate credit card debt.

According to Luther R. Gaffing, president of the New York City-based Budget and Credit Counseling Services Inc. (BUCCS), there are several steps you can take to combat rising credit card rates. First, negotiate with your credit card company. Says Gaffing, if you've been paying your bill on time, simply make a request to have your APR lowered. Most companies don't want to lose good customers and will be open to such adjustments (see chart).

If that doesn't work, consider transferring the balance of your card to a card with a lower interest rate. But experts caution you to read the fine print on such agreements. Oftentimes a company will allow you to switch to another card, but that rate will only apply to the amount of money in the account that you transferred and not to future purchases. The lower rate may also be slated for a fixed period of time. Make certain you're getting the complete package--a deal that includes debts from your existing account as well as those accrued from future purchases--and a clear indication that rates will not escalate over time.

Jumping from one credit card to another, however, can hurt your overall credit rating. According to Steve Rhode, president and co-founder of Myvesta.org, a Rockville, Maryland-based nonprofit financial solutions organization, balance transfers are often viewed by creditors as cash advances with higher interest rates accruing from the first day.

Another option is to consider a secured card. Secured cards, which are backed by your own money, can often carry interest rates of as low as 14% (see chart). Once the secured card company reviews your payment history with them, it will return the initial deposit plus any interest you've accrued.

Pay off credit card balances in full whenever possible. Gaffing believes most people have too many credit cards. He says the average person should have three credit cards: one easily paid back in 30 days; a revolving credit card with an interest rate that is much lower than a store credit card; and a debit card that works like an automatic check

Overall, credit cards are a good, safe, and convenient tool when used as a convenience. To combat rising interest rates, keep only the absolutely necessary credit cards and maintain balances at a level where they are easily managed on a monthly basis.

Personal Credit Cards With the Lowest Interest Rates

                                           Annual
                                         Percentage
                                          Rate(*)     Fee

Pulaski Bank & Trust/                    8.75%        $35
Mastercard Personal Standard

Wachovia Bank Card Services               9.50         88
Visa Personal Classic

Capital One Bank/                         9.90          0
Visa Personal Classic

Simmons First National Bank/              9.95         50
Visa Personal Platinum

USAA Savings Bank/                       10.50         45
Mastercard Personal Standard

Fleet Bank N.A./                         10.63          0
Mastercard Personal Titanium

Metropolitan National Bank/              10.98         25
Mastercard Personal Standard

6anco Popular North America/             11.49          0
Visa Personal Platinum

AFBA Industrial Bank/                    11.50          0
Visa Personal Platinum

Union Federal Savings Bank/              11.99          0
Visa Personal Classic

                                            Grace
                                            Period      Phone Number

Pulaski Bank & Trust/                      25 days      800-980-2265
Mastercard Personal Standard             from billing

Wachovia Bank Card Services                20 days      600-842-3262
Visa Personal Classic                    from billing

Capital One Bank/                          25 days      800-822-3397
Visa Personal Classic                    from billing

Simmons First National Bank/               25 days      800-630-5151
Visa Personal Platinum                   from billing

USAA Savings Bank/                         25 days      800-922-9092
Mastercard Personal Standard             from billing

Fleet Bank N.A./                           20 days      800-225-5353
Mastercard Personal Titanium             from billing

Metropolitan National Bank/                25 days      800-883-2511
Mastercard Personal Standard             from billing

6anco Popular North America/               25 days      800-270-7982
Visa Personal Platinum                   from billing

AFBA Industrial Bank/                      25 days      800-776-2265
Visa Personal Platinum                   from billing

Union Federal Savings Bank/                25 days      317-782-3014
Visa Personal Classic                    from billing

                                               Website

Pulaski Bank & Trust/                    www.pulaskibank.com
Mastercard Personal Standard

Wachovia Bank Card Services              www.wachovia.com
Visa Personal Classic

Capital One Bank/                        www.capitalone.cam
Visa Personal Classic

Simmons First National Bank/             www.simmonsfirst.com
Visa Personal Platinum

USAA Savings Bank/                       www.usaa.com
Mastercard Personal Standard

Fleet Bank N.A./                         www.fleet.com
Mastercard Personal Titanium

Metropolitan National Bank/              www.melhank.com
Mastercard Personal Standard

6anco Popular North America/             www.bancapopular.com
Visa Personal Platinum

AFBA Industrial Bank/                    www.afba.com
Visa Personal Platinum

Union Federal Savings Bank/              www.unlanfedbank.com
Visa Personal Classic