When you carry a balance on a typical credit card, the credit card company is simply extracting money from your wallet. If you carry a $2,500 balance for a year on a typical 20 percent APR card, that means you're giving the credit card company $500 of your hard-earned cash just to keep that $2,500 balance. That's $500 that just blows away in the wind. The higher the balance, the worse it is – and the higher the APR, the worse it is, too.
One of the best money-saving strategies is to simply reduce that interest rate. If you knock an interest rate down from 20 percent to 10 percent, you save $250 a year in the example above. That's a lot of money.
