The credit card industry is a wildly profitable one. They do lose some money to people who get in over their heads and do not pay, but for the most part, the industry reaps tremendous profits from lending money to the public at interest rates that average nearly 20% per year. The new bankruptcy legislation that Congress passed in 2005 makes it even harder now to avoid paying your debts, so the credit industry will probably see their profits continue to rise.

While the average interest rate charged by the major credit card companies is approaching twenty percent per year, it is possible for anyone with a healthy credit score to obtain a card with a lower interest rate. You may have to shop around a bit, and when you find one, the credit limit may be lower than for cards with higher interest rates. Just the same, cards are available at lower rates from smaller banks if you are willing to shop around. Of course, once you find a card with a low rate, it’s up to you to keep the rate low. Many consumers fail to realize that making a late payment, even one time, can cause the issuing bank to raise the interest rate on the card. Penalty rates can approach 30%, and those increases are often accompanied by late fees that can be as high as $39. Once your rate goes up, it is quite difficult to get it down again.
 

If you have a card with a high interest rate, it is certainly worth taking the time to find another card. If you have a balance, you should probably seek out a card that has a promotional interest rate for balance transfers. These offers come and go, but sometimes you can find a card that will allow you to move a balance from an old card to a new one for rates that are as low as 2%. There are some restrictions on those offers, and they will go away if you make a late payment. Those terms also expire after a few months. If you can take advantage of them, you can potentially save hundreds of dollars. Keep an eye out for these offers, as they do pop up frequently due to heavy competition in the credit card industry.

In short, you should consider the following:

• Do some research to find a card with a low rate and little or no annual fee.
• Make your payments before they are due. The single most important thing you can do is to avoid paying late. This will protect your credit score.
• Avoid cash advances. There are high interest rates and fees associated with borrowing cash from your credit card.

These tips should make it easier for anyone to save at least a few dollars on the expense of owning and using a credit card. The savings may seem small, but every little bit helps.