Your Financial Ignorance Could End Up Costing You Thousands

Everyone makes mistakes, but you can avoid these common financial blunders and end up saving yourself a lot of money.

None of us like to make mistakes, even though they’re frequently part of the learning process. Still, if you could avoid making mistakes, especially with your money, you’d probably prefer to do so rather than wasting your hard-earned dollars on bad decision making.

If that’s you, take heed. Here’s your chance to learn from others and avoid their mistakes.

A recent study by the National Financial Educators Council (NFEC) found that 28.8% of Americans aged 65 or older said their personal lack of knowledge about personal finances caused them to lose $30,000 or more in their lifetimes.

NFEC asked participants across age groups, “Across your entire lifetime, about how much money do you think you have lost because you lacked knowledge about personal finances?” Across all age groups, respondents said their lack of financial knowledge had cost an average of $9,724.83, with nearly a quarter of respondents reporting a loss of $30,000 or more.

The survey didn’t ask participants how they lost their money, or what bad decisions they made that led them to part with their cash, but the problem frequently boils down to one thing — people thinking they know more than they actually do. Case in point: Another recent study by Sallie Mae, “Majoring in Money: How American College Students Are Managing Their Finances,” looked at the financial habits of college students between the ages of 18 and 24, including the methods they use to pay for purchases, their knowledge and use of credit, and their money management skills.

Of those surveyed, 65% thought their money management skills were good or excellent. In reality, only 31% of these respondents answered three basic financial questions correctly. The questions were on how interest accumulates, how repayment behavior affects the cost of credit over time and how credit terms affect the cost of credit over time. (You can take a financial capability survey on the NFEC site to see how you compare nationally.)

Whatever your age, making financial decisions on assumptions or only part of the facts can lead to frustration and economic loss. But if you’re in your teens or 20s, chances are you haven’t made any major financial missteps, and can potentially avoid them altogether.

Let’s take a look at some of the key areas of the study and address how you can avoid making mistakes that could end up costing you thousands over your lifetime.

Paying Bills On Time

A large majority of respondents to the Sallie Mae survey said they pay their bills on time — a whopping 77%. Not paying bills on time can result in late payment fees. If they go unpaid long enough, there can be a snowball effect when they end up in collections. Suddenly, that unpaid phone bill is hurting your credit scores, which means it will cost you more in interest when you apply for things like credit cards, auto loans or a mortgage.

If you struggle to pay your bills on time, you’ll want to look at exactly why. Is it because you don’t have enough money to make the payments when they come due? You’ll be well served by reviewing your spending habits, creating a monthly budget and sticking to it. Are you just forgetful? Automating your bill payments can help tremendously.

Setting Aside Savings

A surprising 55% of college students reported setting aside savings every month. Having a financial safety net is important in the event of an emergency — your car breaks down, you break your leg and can’t work, you lose your job. Having an emergency fund or savings account is an important first step when it comes to financial security, so take a look at your budget and figure out how you can start saving small, eventually setting aside enough income to live on for three to six months if needed.

Tracking Your Spending

We’ve already mentioned it twice, but we’ll say it again: Having a budget is important if you want to stay in control of your finances, and tracking your spending is an important part of the budgeting process. More than half of college students surveyed (56%) said they track their spending, and you should too. There are lots of helpful apps available to help make it easier.

Having a Paying Job

If you’re in college and aren’t working, you may want to reconsider that choice. 65% of students surveyed said they had a paying job, and there are numerous studies that show students who work tend to manage their time better. Working also gives you the opportunity to manage your money better. Think of the nest egg you could put away if you don’t need the extra spending money.

Getting a Credit Card …

The majority of students surveyed (59%) said their No. 1 reason for getting a credit card was to begin building credit, and that makes a lot of sense. A credit card, wisely used, is one of the best ways to establish credit. There are lots of good credit cards for students that offer added incentives for making good grades and paying bills on time. There are also secured credit cards if you can’t qualify for a standard card, or you can ask a parent or guardian to become an authorized user on one of their cards to help you establish credit.

… & Managing It Well

According to the survey, 36% of respondents said they never charge a purchase without having the money to pay the bill when it arrives, while 23% said they have rarely done so. On the flip side, 25% said they sometimes do this, and another 15% said they do it frequently.

If you’re charging too much on your credit cards because you just need that latest gadget, keep in mind you’re only making life harder for your future self by racking up debt. If you’re charging too much because you’re using your credit card as an emergency fund for unexpected bills, you may want to consider the additional costs you’re incurring to pay off that debt. Putting a little money aside and earning interest on it is a much better alternative financially.

… By Paying Off Balances Every Month

The absolute best way to ensure you don’t get into credit card debt (and to boost your credit scores as much as possible) is to pay off your credit card balances every month. The survey found that 63% of the students surveyed pay off their balances in full each month. These students also tend to have lower average monthly balances — $825 compared to $1,635 among those who pay only the minimum amount due.

Carrying $1,500 in debt every month on a credit card with an APR of 15.99% can cost you more than $200 a year in interest. You can use this handy credit card payoff calculator tool to see how long it will take you to pay down your debt.

Paying Your Student Loans on Time

Just like making credit card payments on time (and in full, if you can) making student loan payments on time can have a significant positive impact on your credit scores, meaning you’ll qualify for better interest rates on better products with better perks. If you’re already behind on your student loan payments, it’s a good idea to contact your servicer right away and sort out how you can get back in good standing. Don’t let your student loans go into default because you’re afraid to admit you need help.

Being Aware of Your Credit Standing

Of the college students surveyed, 67% said they were aware of credit reports, and about half had viewed theirs (you can get two of your credit scores, absolutely free, on Credit.com).

The survey also found that those who had experience with credit were far more likely to have viewed their credit report than those without credit experience. For example, 66% of students with credit cards reported having viewed their credit report, compared with 27% of those who did not have a credit card.

Seeking Professional Help

Making financial decisions isn’t always easy, particularly when you’ve run into trouble. That’s why it’s always a good idea to consider professional help, whether for tax preparation, investing decisions or getting debt under control. Paying a reputable person for expertise and assistance can end up saving money in the long run.

Reading the Fine Print

Life is full of agreements, and many of those include legally binding contracts. Most are on the up-and-up, but it’s still a good idea to fully read any agreement you sign and understand the terms completely. If you don’t, this is another case in which you may want to seek professional help to save yourself frustration and possibly money further down the road.

These are the basics to setting yourself up to succeed financially. Of course, there will be hiccups along the way, but by staying on top of your finances and asking lots of questions, you’ll be able to avoid some of the common mistakes many people make.

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When to Sell Your Stuff to Make the Most Money

It's time for spring cleaning. Here's how to get top dollar for your unwanted items.

If you’re like most folks, you have a lot of things tucked somewhere in the garage or storage shed that you aren’t using. But the thought of sorting through it all and trying to sell it can sound annoying at best and daunting at worst, especially when you think you won’t get much money for it.

“Nearly half of all Americans have $1,000 worth of unused items sitting around their homes, but the effort of having to spend the afternoon at a consignment store (or manning a garage sale) deters them from cashing in,” said Kelly Stephenson, director of marketing at OfferUp, an online marketplace.

But what if you could virtually guarantee you’ll get top dollar for your junk … ahem … stuff? Just think of what you could do with an extra $1,000. You could take a vacation, pay off your credit card debt, start an emergency fund or pay down your student loan debt.

The folks at OfferUp put together a list of the best times of year to sell different kinds of items, so you can get top dollar for your things. Whether it’s your old weight bench or your classic ’65 Mustang, knowing the right time of year to sell your stuff can make a big difference.

And by all means, avoid the garage sale option. Do you really want people showing up at your house at 7 a.m. to rifle through your things and haggle you down? Unless you enjoy a good barter, make it easy on yourself and use an online selling platform.

“The beauty of buying and selling online is that it simplifies the process,” Stephenson said. Many sites allow users to photograph and post items for sale immediately with their mobile phones.

Keep in mind when buying or selling online that it’s important to use trusted, verified sites and apps that include ID verification, user rating systems and other safety features that keep your credit card and personal identification information safe. (Be sure to check your credit report for errors or anything else fishy. You can get a free credit report snapshot at Credit.com.)

Here are the best times of the year to sell your stuff.

January Is Best for Gym Gear

With the surge of New Year’s resolutions about getting fit, many folks look for a good deal on gear to help them do it. The treadmill collecting dust in your garage can earn you the most money in the month of January. Same is true for hand weights, foam rollers, yoga mats and fitness DVDs.

February Is Best for TVs

If you upgraded your TV set over Christmas, get rid of your old one and put some extra cash in your pocket by selling it in February. The Super Bowl is this month, and TV sales tend to soar as many people want to host a party and watch the big game on a good TV.

March Is Best for Yard Gear

April showers may be gearing up to bring May flowers, but those with a green thumb are eager to get started on their gardening no matter what the weather is like. Your extra flower bulbs, shovels, gardening gloves and pots will sell well in the month of March.

April Is Best for Summer Festival Tickets

Coachella marks the beginning of music festival season in April and it continues on through the spring and summer with Outside Lands in California, Bonnaroo in Tennessee, Lollapalooza in Illinois, and Sasquatch in Washington. By April, tickets are already available (and are often already sold out), so if you decided to buy a ticket and have since changed your mind about attending, April is the best time to get cash back and maybe even earn a profit if demand is high.

May Is Best for Sports Cars & Convertibles

If your mid-life crisis sports car is gathering dust in the garage, or your family’s move from L.A. to Seattle means the convertible is no longer going to be in the regular driving rotation, DMV.org data show that springtime is your best time for selling them.

June Is Best for Kids Toys

With summer break around the corner for most schools, June is a great time to cash in on unused toys lying around your home. Put any soccer balls, bikes your kids grew out of and puzzles or board games they’re sick of up for sale this month.

July Is Best for Baby Gear

More babies are born in July and August than any other months of the year, according to Centers for Disease Control and Prevention data. For families with old cribs and newborn baby gear packed away in the garage, a great time to sell them to get the most bang for the buck is in in the summer.

August Is Best for Back-to-School Items

Backpacks, lunch boxes and any unused school supplies left over from past school years can earn you some cash in August. Art supplies can also sell well because teachers are always looking to save cash stocking up on supplies for their classrooms.

September Is Best for Furniture

Many people, especially those with kids, tend to move during the summer months. The weather is better, the kids are out of school, the housing market is bursting with more options. By September, folks are moved and settling in, looking to fill their new space with the furniture they need. Take advantage by selling that old sofa during this month.

October Is Best for Children’s Snow Gear

No parent wants to take the gamble in April that the snow boots they’re buying for their kid are going to fit come December. If your kids have grown out of their old boots, jackets, pants, gloves and hats, sell them in October to ensure you’ll get solid offers from buyers.

November Is Best for Holiday Decor

If you have boxes of holiday decorations you know you won’t be using this year, dig them out of the garage and sell them for cash in November. Folks already gearing up for the upcoming visits from family will be interested in finding new ways to deck their halls.

December Is Best for Jewelry

The holidays not only spark a surge in the purchase of engagement rings and other sparkly gifts for significant others, but also a peak in breakups. So, if you’ve been dumped in the past year, or just want to sell some unwanted jewelry, now’s the time to sell it on a site like I Do, Now I Don’t, and get some extra holiday cash.

Now get out there and sell!

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10 States Where Foreclosure Woes Linger

Foreclosure rates across the country continue to improve, but these 10 states are still struggling with above-average residential foreclosures.

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The Average Property Taxes in All 50 States & D.C.

A comparison of property taxes across all 50 states and Washington, D.C.

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6 Tax Mistakes Procrastinators Make & How to Avoid Them

Don't let your last-minute tax stress lead to these avoidable mistakes.

We get it. Doing your taxes is no fun, especially if you know you’re going to owe money. But as with any project on which you procrastinate, leaving everything to the last minute can lead to errors, both large and small, and some of those errors could cost you serious money.

If you’ve gone and done it, though, and are still looking at that pile of tax forms over there in the corner, we’ve compiled a list of six quick-and-dirty tips that could keep you from making some obvious, and not-so-obvious, mistakes when you finally sit down and tackle the task. They could also help you maximize your tax refund.

1. You Forgot to Sign It

You might wonder how anyone could forget to sign their tax form, but this simple process is one of the most common tax mistakes, according to the IRS. Just like forgetting to sign a check or a contract, it means your return isn’t valid. Usually, there isn’t a penalty or interest associated with this error (since you’ve already included a check or electronic payment if you owed), so the IRS will just send a notice asking for a valid signature, but it will delay the processing of your return. If you’re getting a refund, that too will be delayed.

So check, double-check — heck, triple-check — that you signed or completed the e-signature process before filing your return. Also, check out these last-minute filing tips from the IRS.

2. You Miscarried the 9

Math errors are also a very common mistake made by folks in a hurry. Fortunately for most people, the IRS corrects any miscalculations, so there’s no need for filing an amended return. But these mistakes can mean the difference between you thinking you’re getting a refund and the reality that you actually owe taxes, so be sure to check your calculations carefully.

One way to help you avoid math errors is to file electronically so the calculations are done for you. Bye-bye, No. 2 pencil! So long, calculator!

3. You Didn’t Account for All Your Income

Did you have a side hustle early last year? A freelance design gig for a friend’s business? If so, you’re going to need to account for it, regardless of whether you received a W-2 or 1099 from whomever paid you. That’s because, while there’s an IRS threshold for filing these documents by employers, there’s no similar threshold for claiming the income. Income is income is income. If you made money and don’t report it — and the IRS catches it — it’s going to cost you penalties and interest at best, and open you to a possible audit at worst.

4. You Forgot Deductions or Tax Credit

It’s easy to forget these things when you’re in a hurry, but they can end up saving you some serious money and are well worth the extra time to figure out if you qualify. So if you’re just claiming the standard deductions because you’re under the gun, you might want to take a deep breath and check out TurboTax’s list of 10 commonly overlooked tax deductions that can keep you from overpaying the tax man.

5. You Filed for an Extension but Didn’t Understand the Rules

Filing for an extension is a great idea if you’re down to the wire and don’t really understand your tax situation. But remember that an extension gives you an extra six months to file your paperwork, but not an extra six months to pay any taxes due. So, if you’re confused, tax pros recommend doing a quick calculation of your taxes, filing for your extension and making any required payment of taxes you think you owe. This will help you avoid penalties and interest once you get your final calculations together.

6. You Didn’t Bother to Request an Extension

You gave up. You shoved, slammed and jammed your return through and now it’s full of mistakes that are going to cost you money by way of penalties or because you’ve left money on the table. It’s a much better idea to file the extension, then get the help you need from a tax professional to ensure you’re not overpaying your taxes.

Whatever you do, make sure you file your taxes. Unpaid taxes can have serious consequences on your personal finances, including your credit scores if they go unpaid long enough. You can see how any outstanding taxes you might have are affecting your credit by getting your two free credit scores, updated every 14 days, here at Credit.com.

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This Is Not Your Father’s 401K: The Retirement Product You Should Know About

Want guaranteed income for life? Here's how you can get it.

Chances are you’re like most Americans and, regardless of your age, you aren’t saving enough for retirement, if you’re actually saving anything at all.

Nearly 40 million U.S. households (45%) have no retirement assets, according to a recent report by the National Institute on Retirement Security, and half of those households are headed by someone aged between 45 and 65. In fact, savings rates are so bad that many Americans are dying with an average of $62,000 in debt.

Even if you are saving enough for retirement, you might still wonder if that money will last your entire lifetime. Defined contribution plans like 401Ks are great at helping employees save for retirement, but they provide no guarantee of income as pensions do. On top of that, most 401Ks are self-directed, meaning those who do a poor job handling their investments could end up with significantly less money than they need in retirement.

But what if you could guarantee yourself income for life, just like ubiquitous company pension plans used to provide (and government pension plans still do)?

Well, you can. Here’s how.

Back in 2014, the Treasury Department started an initiative focused on “putting the pension back” into 401K retirement savings. (Need to brush up on retirement lingo? Here’s a handy guide.) Through loosened restrictions and some tax-law changes, the Treasury made it easier to convert funds from retirement savings into plans known as longevity income annuities, or LIAs, that provide guaranteed lifetime income.

Income for Life

LIAs are deferred annuities and, while they’ve been for a while, they’ve only recently become a part of mainstream retirement planning. The Treasury initiative could even cause them to become an integral part of 401K target funds. Here’s how they work: Say you have $100,000 in retirement savings. At age 65, you use $10,000 of that money to purchase an LIA. “Even in the current low-interest-rate environment, a deferred single-life annuity purchased at age 65 for a male costing $10,000 can generate an annual benefit flow from age 85 onward of $4,830 ($3,866 for a female) per year for life,” a recent National Bureau of Economic Research working paper concluded.

It’s easy to see how helpful this kind of guaranteed income could be, particularly given larger investment amounts. Of course, it’s a hedge that you’ll live long enough to take advantage of those funds, but some programs provide for reimbursement should you die before accessing all of your money. More on that in a minute.

According to Olivia S. Mitchell, a professor at the Wharton School of the University of Pennsylvania and a co-author of the working paper mentioned above, LIAs are available to investors but are not yet tied to defined-contribution plans.

“There has been discussion about including them in the target-date suite of funds, and some employers are actively looking for options,” she said in an email. “Relatively few insurers have them available as yet.”

“One reason annuities or lifetime income streams are not a standard feature of 401K plans is that many people don’t understand these products,” she wrote in an article for Forbes. “For instance, some older individuals tend to underestimate their chances of living a long time, so they don’t take proper precautions against outliving their assets. Others don’t understand financial concepts, and so they’re reluctant to take unfamiliar financial decisions. After all, retirement is usually a once-in-a-lifetime event!”

Just because they aren’t directly tied to defined-contribution plans just yet doesn’t mean LIAs aren’t easily accessed. AARP, for example, has been offering its Lifetime Income Program through New York Life since 2006. AARP’s plan has a cash refund feature so, as we mentioned earlier, if you die before your payments equal your annuity purchase price, your beneficiary will be paid the difference.

Is an LIA Right for Me?

As with most financial tools, some people will benefit from an LIA more than others. “People in poor health might not want to elect deferred annuities, particularly if they have a poor survival prognosis,” Mitchell said. “Some very wealthy people will not need the LIA as they can self-insure against outliving their assets. Retirees with a (well-funded) defined benefit pension probably don’t need additional annuitization. And people with a very small nest egg might not find it worthwhile to annuitize, say, $10,000. But much of the middle class could benefit.”

In considering LIA plans, Mitchell recommends asking how highly rated the insurer is who provides it. She also suggests knowing how well the state insurance guarantee fund is being run and the maximum amount you’d recover should the insurer go bankrupt. (As you’re planning your retirement, you should also make sure you have a full picture of your finances, including your credit. You can get a free snapshot of your credit report on Credit.com.)

So how much should you consider putting into an LIA? “Older individuals would optimally commit 8% to 15% of their plan balances at age 65 to a LIA, which begins payouts at age 85,” Mitchell, et al, wrote in their working paper.

As for timing, it doesn’t really make sense for someone who isn’t at or near retirement age to purchase an LIA. For one thing, you can’t access your retirement funds without penalty until age 60.

“It makes sense to decide how much to devote to the LIA in your mid-60s, since that gives 20 years over which the annuity value can build up,” so you can begin taking payments at age 85, Mitchell said.

Of course, there are a variety of annuity products to suit different personal needs, such as earlier payout options, so it’s a good idea to speak with a financial professional who can help you decide what product might be best for your financial situation.

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30 Cities Where Millennials Are Still Living With Their Parents

Across the country, more people ages 18 to 34 are living at home with their parents. Here are the cities where it's happening the most.

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Why It’s Not Smart to Get a Big Tax Refund Each Year

Why let the government hold your money throughout the year when you can put that money to work today?

If you’re expecting a big tax refund this year, you’ve probably already decided what you’re going to do with that money. Whether it’s a vacation, a new jet ski or a nice boost to your retirement savings, you’re probably pretty excited about the extra cash. But here’s the deal: Getting a big tax refund each year isn’t necessarily a good thing. It means you haven’t been putting that money to work for you all year long.

“If you are receiving a refund this year, it means that you overpaid your taxes during the course of the year. Instead of giving the government your hard-earned money, think about all of the great things you could have done with that money,” says Ron Weber, a senior marketing manager with Quicken Inc. “You could have paid off credit accounts, invested it in your future, and/or spent it as you earned it. Money is always better in your pocket than in someone else’s — even if that someone else is the government.”

Here’s how you can make sure you boost your bottom line this year by not overpaying your taxes and also not getting a refund.

Review Your Withholdings

Sit down and review your paycheck withholdings and see if you can break even when it comes to the taxes you pay. You’re looking for your Goldilocks zone. Not too little, not too much, but just right.

“If you are unsure what to do, experiment until you get it right,” Weber advises. “Most people are unaware that you can change your number of payroll exemptions as many times as you wish.”

You can also try using a tool to help you find your Goldilocks zone. The Internal Revenue Service has a withholdings calculator that can help you see how much difference a change in your withholdings will make. Certainly, you don’t want to owe taxes next year if you can avoid it, but getting your tax refund as close to zero as possible means you can invest or spend the additional income on a regular basis instead of letting the Treasury Department store it for you.

As you review your withholdings, you’ll want to be sure you …

Don’t Forget Your House …

If you own your own home, you probably know you can claim mortgage interest and property tax deductions, so take into account how much that will reduce your tax burden.

… Or Your Investments

If you own investment property, you’ll also want to consider any expenses you can deduct that might affect your taxes for next year.

… Or Big Life Events

“There are certain life events that you want to keep in mind when changing your exemptions such as marriage, having children or any situation where you decrease the number of dependents, such as divorce,” Weber says. “Also, keep in mind that while you are able to change the number of withholdings as often as you wish, your employer doesn’t have to apply it until the first payroll ending 30 days after you submit the change, effectively limiting the number of times you actually can change. Other than these considerations, the ultimate goal each year is to get your refund close to zero. Make it a game and see how close you can come.”

But You’re Terrible at Saving Money, You Say?

Of course, if saving isn’t your forte and you’re going to just end up spending whatever additional income you get throughout the year, letting Uncle Sam hold it for you might not be such a bad idea if you plan to put your refund directly into a retirement account like an IRA. The IRS will even help you keep your promise to invest the money by direct depositing all or part of your refund into savings, an IRA or even toward buying savings bonds.

If that’s your situation, you can read our guide on how to maximize your tax refund. But investing that money into a 401K throughout the year could be a better alternative, especially if your employer provides matching funds.

Those savings can pile up, especially if you start young. If you’re planning to turn your refund into the start of a lifetime of saving, check out our list of 50 things young people can do to make sure they’re set when it’s time to retire.

Also remember that keeping your credit in good standing helps you save money throughout the year, on everything from loan and credit card interest rates to mortgages. A good way to check on how your credit is faring is by getting credit your two free credit scores, updated every 14 days, on Credit.com.

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Top 25 Cities for the Millennial Homebuyer

Borrowers under age 35 are starting to buy homes again. Here are the top 25 cities where they're doing it.

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32 Ways to Leave Your High-Interest Credit Card

credit card with high apr

Sure, there were the good times — back when you and your credit card first got together. Maybe your card was giving you a 0% introductory APR. Maybe you went everywhere together, bought everything together … but things changed. Today you feel like you’re giving a lot more than you’re getting, and now you’re wondering how you can leave your high-interest credit card behind.

While there aren’t as many options for leaving your credit card as there are ways to leave your lover (Paul Simon famously notes there must be 50 of those), it doesn’t mean you’re stuck. No, you’re probably not going to be able to slip out the back, Jack (that debt’s not going away even if you run!), but you most definitely can make a new plan, Stan. So don’t be coy, Roy, just listen to me …

1. Negotiate a Lower Rate

Most people don’t bother to ask their credit card issuer for a lower rate, but sometimes lowering your current APR can be as simple as that, so …

2. Don’t Be Afraid to Ask

Before you storm out on your credit card, try communicating. It could be worth your time to see if your card issuer will lower your interest rate, especially if your relationship is a long one. Keep in mind, they might pull your credit to see if you’re deserving of a lower APR. That’s why you’ll want to …

3. Check Your Credit Score …

You’ll want to get an idea of whether you’re likely to qualify for a lower APR, lest you incur a hard inquiry on your credit report only to get rejected. (You can view two of your free credit scores, along with some recommendations for credit cards it could help you qualify for, on Credit.com.)

4. … Fix it Up Before Inquiring

If your scores are less than stellar, you may want to try brushing them up before you call up your issuer. You can find 11 ways to improve your credit here.

5. Do Some Research

Are there other cards out there you qualify for that can offer you a better APR? If so, you can use this information to your advantage while negotiating with your current issuer.

6. Begin Negotiating With Your Oldest Card

Like we said before, your issuer might be willing to work with you, especially if you’ve been a cardholder for several years, so start negotiating with whichever card issuer you’ve been with longest to see if you can reduce your interest rate there.

7. Keep It Simple

It’s not a difficult process to ask for a decrease in your APR. In fact, it’s as simple as a call to the customer service line listed on the back of your card. Yes, they could say no, but that’s where your research will come in handy and you can …

8. Leverage Your Loyalty

If they say they can’t reduce your rate, remind them of how long you’ve been with the company, how you’ve never had a late payment or maxed out your card’s balance. Whatever positives you can cite can be helpful. If that doesn’t work, tell them what the other cards you’ve researched are offering. But most importantly …

9. Don’t Give Up Right Away

The old adage “if at first you don’t succeed, try, try again” is especially important here. Your issuer may say no, but that doesn’t mean you should give up. Call them multiple times, and ask to speak to a supervisor if their answer continues to be no. Of course, you’ll want to be polite throughout the process. If all of this doesn’t work, it’s time to …

10. Consider an Upgrade

A lot of card issuers have tiered credit card offerings, so you could potentially upgrade to a new card with the same issuer that offers a lower interest rate and transfer your current balance to that card.

11. Keep Watching Your Credit …

Just like when an issuer considers lowering your interest rate, which we mentioned above, they’ll likely check your credit as part of your application for a card upgrade. So, if you think there’s a better credit card available elsewhere, you might not want to ask them to upgrade you.

12. … & Limit Your Card Applications

In fact, every time you apply for new credit you’re going to have a hard inquiry and a ding to your credit scores. These can add up if you have too many in a short span of time and even impact your ability to qualify for a new card, so be very selective or you could end up hurting your credit. (You can read here about how often you can apply for new credit without hurting your credit scores too much.)

If you’ve tried all these steps with your current credit card issuer to no avail, it’s time to look at starting a new relationship with a new issuer.

13. Get a Balance Transfer Card

Let’s say you’ve tried everything to lower your current APR with your card issuer and they just won’t work with you. Perhaps you’ve had some late payments or you just haven’t been with them that long. Getting a balance transfer credit card could make sense for you.

14. Find an Introductory 0% APR

There are lots of options to choose from in the world of balance transfer credit cards with a low or even 0% introductory APR. Here’s how to find the right one for you …

15. Comparison Shop

You can start by checking out some of the best balance transfer credit cards and comparing what they offer.

16. Give Yourself Plenty of Time

There are balance transfer cards that offer as long as 21 months at 0% financing for balance transfers and even new purchases. If you have a lot of current credit card debt, that could be very beneficial to you, as you’ll eliminate your interest while paying down your principal.

17. Don’t Forget the Transfer Fees …

Of course, most balance transfer cards charge you a fee for transferring your balance – typically 3% to 5%, so be sure to compare those amounts as well.

18. … & the Annual Fees

Some cards also charge an annual fee, so you’ll want to consider that cost as well as you compare balance transfer offers.

19. Make Sure You Time it Right

If you’re looking at buying a new house, car or other major purchase anytime soon, you’ll want to time your credit card application with that in mind since your credit scores will be impacted by that aforementioned hard inquiry that takes place during your application process.

20. Include Your Balance Transfer Amount in Your Application

This can help ensure the transfer goes smoothly and quickly. The new issuer will reach out to your current card issuer once you’re approved and get the transfer process started right away, saving you the hassle of doing it later.

21. Pay Off Your Balance

Once you have your new balance transfer card, it’s important to focus your attention on getting that balance paid off before your introductory rate expires. Otherwise, your balance is going to revert to the standard variable rate.

22. Keep Your Old Card

No, keeping your old card isn’t exactly leaving it, but hear us out. You might be tempted to close your old card, particularly if your card issuer refused to reduce your APR when you transferred your balance, but keeping it open can be good for your credit score.

That’s because your credit scores improve the longer you have a credit account in good standing, so if you had a decent payment history, keeping that card open could really help. Moreover, your total credit line will be higher if you keep it open, also helping your scores. (You can find a full explainer on how closing a card can affect your credit here.)

Go ahead and cut it up, though, if it makes you feel better. That will also keep you from using it.

23. Keep Your New Interest Rate Low

Now that you have a card with a lower APR, even if it’s just an introductory rate, there are things you can do to keep your rate as low as possible. You’ll want to …

24. Make Your Payments On Time …

Late payments can send your APR soaring, so make all of your payments on time to avoid a penalty APR.

25. … & Keep Your Balance Low

If you can’t pay off your balance each month, at least try to make payments that keep your balance below 30% of your credit limit, though below 10% is even better if you want to do your credit scores a real favor.

26. Don’t Take Cash Advances

These usually come with a higher variable APR than purchases or balance transfers, so try to avoid them if you want to keep your rates down.

27. Try Some Other Alternatives …

If you’ve had a bad run financially and aren’t going to qualify for a credit card with a lower APR, you still have plenty of money-saving options, so don’t give up just yet. You have some alternatives …

28. Like a Personal Loan …

You may be able to pay off your credit card debt with a personal loan from your bank or credit union, but keep in mind that unless you have excellent credit, you’ll likely need some kind of collateral to secure it. Be sure to ask about the lender’s credit requirements before applying.

29. Or a Home Equity Line of Credit …

If you own a home and have some equity built up, this can be a great option for paying off debt at a lower interest rate. You can save a ton by moving your debt to a HELOC.

30. … But Don’t Spend Your Savings

Use the money you save by refinancing through a HELOC on creating an emergency fund (if you don’t already have one). Once that’s set up, you can use the money as prepayment against your home loan or to boost your retirement savings.

31. Consider a Debt Management Plan …

A debt management plan allows you to turn over all of your debt information to a credit counseling agency. You make one monthly payment to them, and they pay your credit cards and other debts for you. These plans usually last three to five years, and a lot of lenders lower your interest rates when you participate in such a plan. You’ll want to be sure to find a reputable credit counseling agency, so do your research.

32. … Or File for Bankruptcy

As a last-resort option, you can consider getting out from under your high-interest credit card debt by declaring bankruptcy. You’ll lower your debt and have many years to pay it off depending on the type of bankruptcy relief you file for. Just remember you’ll also have a major blemish on your credit reports for up to 10 years that could seriously affect your ability to get credit (in general and at n affordable rate) during that time. Still, if your debt is significant, this could be the right option for you. Talking to a credit counselor or bankruptcy attorney before deciding could help you make the right choice for your circumstances.

Have another question about credit card debt? Leave it in the comments section and one of our credit experts will try to get back to you.

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