Improve Your Credit Rating And Earn 11.7%

In this time of economic crisis, financial experts are advising people to pay down their credit card balances. This can dramatically improve your credit rating. Yet there is one simple “secret” that experts often neglect to mention: When you pay off your credit cards, you are essentially investing in yourself — and the returns can be formidable. What is the interest rate that you pay? 11.7% is the average credit card interest nationwide. By paying your balances in full, you will essentially “make” an 11.7% return.

If you have $10,000 in credit card balances, as the average family does, then you will “earn” $1,170 each year in savings by not carrying these balances. If you pay a higher interest rate, then your earnings are even greater.

There are still more financial benefits. By paying down large credit card balances, you will improve your credit rating. This in turn will lower the interest rate that you have to pay on mortgages, loans and credit cards. Even a small reduction of a percent or two on a mortgage or loan can save you thousands over the life of the loan.

If you are not in a position to pay your balances in full, pay as much of your balance as you are able. Then take advantage of a 0% balance transfer card. These cards offer an introductory rate of 0% for up to 15 months. During this period, your payments will go directly to paying down your balances, giving you a head start in paying off your cards.