Most Florida credit card users know that lower interest rates are better than higher interest rates. However, exactly how those credit card interest rates translate to interest charges every month is somewhat confusing. Of course, Florida consumers who pay off their credit card balances every month, typically don’t have to worry about interest charges. Yet, because most credit card users roll their balances over from month to month, knowing at least the a few basics about interest rates is important. Once you understand how much more purchases cost due to interest, you may want to reign in your credit card use. Good credit card management is, after all, crucial to Florida residents when it comes to protecting their finances and their credit scores.
Why Florida Consumers Have Different Credit Card Interest Rates
Credit card issuers assign interest rates according to several factors. First, they consider your credit score. Typically, Florida consumers with lower credit scores are issued credit cards with higher interest rates. This is to offset the risk that these credit card holders pose for the creditors. Luckily, credit repair can lead to improved credit scores and credit cards with better interest rates.
Florida credit card users should also know that the prime interest rate influences all credit card interest rate. This is because almost every credit card comes with a “variable interest rate.” This means that the assigned rate varies based on fluctuations in the prime rate. Fortunately, the prime interest rate seldom changes, and when it does, it is usually by fractions of a percentage point.
If you are curious about your interest rate, on your credit card agreement and statements, it is shown as an annual percentage rate, or APR. Keep in mind that this is just a standard unit of measurement. So, technically, you can break down your annual percentage rate into monthly, weekly, or daily interest charges. Just remember that the math gets a little tricky, especially if your spending varies a lot.
How Florida Consumers Can Get a Rough Estimate of How Much They Spend Every Month on Credit Card Interest Charges
Florida consumers who want to calculate their monthly credit card interest charges should first divide their APR by 12. For example, if your APR is 20%, your monthly interest rate is 0.0167. Therefore, hypothetically, if your normally carry a credit card balance around $1,000, your interest charges roughly amount to $17. Of course, this estimate doesn’t take into account the compounding effects of daily interest accrual. However, daily compounding normally adds only a small amount to your total interest charges for the month.
Granted, and extra $17 for the month doesn’t seem like much. However, if you constantly carry that $1,000 over from month to month, you pay approximately $204 for the year. Just imagine how much you’re paying in interest charges if your APR is 30%, and a consistent balance of $2,000 or more. It is no wonder that so many Florida credit card users feel like they will never escape credit card debt.
Why Florida Consumers Should Pay Down High Credit Card Balances to Pay Less in Interest Charges and Improve their Credit Scores
For Florida consumers carrying high credit card balances, there are two very good reasons to pay them down. First, as previously mentioned, you’re probably paying too much in credit card interest charges. This makes everything you buy with your credit cards cost more, and strikes a serious blow to your budget. Also, the money that you spend on interest doesn’t pay for anything other than the privilege to roll your balance over from month to month. If you are like most Florida residents, this money could serve much better purposes.
Next, if your credit card balances are too high, you can damage your credit score even if all of your payments are made on time. This is because part of your credit score is based on how much of your available credit you are using at a given time – or, your “utilization rate.” In the eyes of lenders, high utilization rates indicate financial stress. So, if your utilization rate goes well over 30% of your spending limits, your credit score normally drops by a few points.
Of course, this isn’t the only way high credit card balances can lead to lower credit scores. Unfortunately, when credit card debt gets out of control, it sometimes gets harder for Florida consumers to keep up with payments. Then if these payments are missed, or, even worse, if the account is charged off, credit scores can plummet.
Another Way for Florida Consumers to Improve their Credit Scores
Anyone in Florida who uses credit cards should keep careful tabs on their credit reports – especially if they are trying to improve their credit scores. You may not realize this, but about 80% of credit reports contain errors of some type. Also, many of these inaccuracies are significant enough to harm credit scores.
Mistakes on credit reports that harm credit scores are typically caused by creditors and the credit bureaus. These errors are not your fault, so you shouldn’t have to deal with them on your own. Instead, contact Credit Repair Lawyers of America in Florida. The experienced credit attorneys at our firm work under the Fair Credit Reporting Act (FCRA) to fix credit reports – for FREE.
Even if you’re not sure about whether or not your credit reports are flawed, give us a call. We’ll help you pull your credit reports and get them to us securely. Then, we will go over your credit reports with you, and, like all of our services to Florida clients, it won’t cost you anything.
The Free and Legal Way to Get Better Credit
Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (813) 940-7255 or sending him a message through our contact page.
For more information about Free Credit Repair, please visit https://creditrepairlawyersam.com/florida/credit-repair/.