To find out, call the number on the back of your credit card and ask the customer service representative what your current interest rate is. While you are on the phone, ask the representative to lower the rate, no matter what it is. The rep will probably decline your request but as long as you have him on the phone it is worth a shot. Ask the representative for your current balance as well. And finally, ask the rep if the rate he told you covers all of your balances. Sometimes the card companies will try to be sneaky by quoting a rate for the overall account and not tell you that the rate on portions of your balance is significantly higher.
Do this for all of your credit cards, writing down the interest rate and the balance. Also make note of any higher interest rates that apply to specific portions of your balance. Once you have done this, set up a payment schedule that allocates the majority of your monthly payment to the highest interest rate card. Of course, make sure you pay more than the minimum payment on all of your credit cards each month.
Let’s assume you have two credit cards, each with a balance of $10,000. One credit card has a 20% interest rate and the other credit card has a 10% interest rate. If you can pay off the 20% credit card in one year, while paying what you can on the other card (always pay more than the minimum payment due) you can save more than $1000 in interest simply by paying the higher interest rate credit card first.
