With credit card interest rates going up, you might want to consider transferring balances to a card with a lower interest rate.
Low rate APR credit cards are looking more and more attractive, and in some cases may even be a better deal than credit cards offering 0% deals on purchases and balance transfers.
There are still credit cards out there that offer 0% or a very low interest rate for 12 months for balance transfers. It's a great opportunity to pay down as much as you can over the monthly minimum and pay down your balance over 12 months. But, when the the interest free period is up, you will start paying the credit card issuer's normal interest rate, which could be 17% or more.
After the lower introductory rate is over you could switch again, but you could end up paying balance transfer fees, up to 3%, all over again. In most cases the amount you save on interest payments should more than offset the fee.
Here are some things to consider when transferring balances:
SMALL PRINT: Be sure to read the small print about teaser rates. Be sure the introductory rate is long enough to offset the balance transfer fee.
CHECK THE LENGTH OF THE INTRODUCTORY RATE: Most last up to a year, but it's not uncommon for the low introductory rate to expire after three or six months.
IS THE CREDIT LIMIT HIGH ENOUGH: Be aware that credit card companies may not give a credit line high enough to transfer all of your debt. You'll end up paying part of your debt on the old card and part of it at the lower introductory rate. But a portion of debt at a lower rate is better than nothing.
CHECK THE BALANCE TRANSFER FEE: Be sure to check the balance transfer fee and that the lower introductory rate out weighs the amount of the balance transfer fee.
In Suze Orman's new book "Suze Orman's 2009 Action Plan" she discusses how important it is to get out of credit card debt now and that it is the number one action to take in 2009. If transferring balances to a lower rate card will help you do that, than by all means do so. There are a lot of credit card options to chose from. Just make sure you do your homework and pick the card that's right for you.
For a variety of credit card options visist credit-land.com.
2 comments:
Credit cards have enourmous cost to us. We want what we want now! I ran across a book titled: The SmartestWay to SAVE, Why You Can't Hang on to Money and What do Do About It" by Samuel K. Freshman and Heidi E. Clingen. The book talks about why some people who have small incomes get rich and some people with big incomes go into bankruptcy. It's all about how we think about money. Simple and practical. Everyone should read this book! I was truly impressed.
Thanks Sherry, Sounds like I need to check out that book. I do believe people are in different financial positions because of the way they think. "What the mind of man can conceive he can acheive."
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