In addition to encouraging credit card
competition through promoting the most attractive cards in the country, we
strive to help consumers cope with credit card debt by teaching various debt
reduction strategies. We hope that you find the following tips beneficial...
Interest Rate Awareness:
We can not stress enough the importance of being aware of interest rates
when using your card(s). Please utilize the lists above!!! High rate cards
can be put a BIG dent in your pocketbook. To illustrate our point again, a
cardholder with an average balance of $2,500 and a 19.99%
purchase rate will pay $1000.00 in interest alone in just two years!
The same cardholder would pay only $400.00 in interest if the rate
were lowered to 8.00%, a difference of $600.00! Also, be aware
of cash advance rates. Cash advance rates are typically much higher than
purchase rates and usually there is no grace period for cash advances (not
to mention cash advance fees). Therefore, avoid cash advances if at all
possible.
Taking Advantage of Promo Rates:
While introductory or "teaser rates" are generally short lived and are
intended strictly to entice consumers, savvy consumers can benefit a great
deal from promotional rates. Look for cards that offer longer term
introductory rates and longer term promotional rates on balance transfers
(6-12 months). Some cards even offer very attractive long term promotional
rates on balance transfers...rates that are good until the dollar amount
transferred is entirely paid off!
Consumers that have more than one card with available credit can transfer
balances between cards in order to take advantage of promo. transfer rates
(a ploy known as "card dumping"). Finally, when the promo. rate period ends
(for transfers), it is a good idea to call the card company and request an
extension of the rate. Consumers with a good payment history often get
extensions. You must be aggressive when dealing with credit card companies!
You can also negotiate to have your regular interest rate lowered.
Threatening to pay off a given card often puts consumers in a bargaining
position when dealing with credit card cos.
Avoiding the Minimum Payment Pitfall:
One of the greatest card pitfalls is making only the minimum payment each
month. Make every effort to pay over the minimum each month, even if it is
only a few dollars over. The long term impact of making "just the minimum
payment" is devastating. According to Consumer Credit Counseling Services,
paying the $60 minimum payment on a $3,000 credit card balance would take
eight years to pay off and would translate into $2,780 in interest! By
paying only $50 more a month, however, the debt would be paid off in three
years and result in a savings of $1,800 in interest charges!
The Graceless Grace Period:
Avoid cards that begin computing their grace period at the time of
purchases, rather than billing. Only a few cards still use this method of
interest computing, but there are still some out there. Keep your eyes
peeled!
Credit Couseling Services:
Nonprofit debt management programs can be very helpful when you have over
$2,000 in credit card debt.
Consolidated
Credit Counseling Services, Inc. (featured offer), a nationally
recognized non-profit organization, offers a free debt analysis that only
takes a few minutes to complete. Such programs negotiate with credit card
companies and often can lower credit card interest rates by 50% or more!
Furthermore, participation in such programs helps safeguard against
bankruptcy. |
