Tips on Consolidating Credit Card Debt
Credit card debt is the number one financial problem of Americans today. The average household has a credit card balance of about US$8,000 over multiple credit cards and store cards. This balance is at its highest after the holidays, when most of us have racked up major credit card bills on gifts. If you are carrying one too many big balances, there are some things you can do to lower your debt. Be sure to consult our Sound Money Tips Guide to Credit Cards for answers to all your credit card queries.
Meantime, the most common form of credit card debt consolidation is to transfer the balance of all your credit cards onto one card with the lowest interest rate. This can save you thousands because APRs (Annual Percentage Rates) that are 12%-24% can get reduced to 10%, 8%, 6% or even 0% - and consolidating has the added bonus of combining all your payments into one easy, fixed monthly sum. Still, there are lots of “fine print” traps. Look out for these top tricks of the credit card consolidation trade:
1. Balance-transfer Fees – Some issuers charge transaction fees as high as 4 percent for balance transfers so that the higher the balance, the higher the transaction fee. Other credit card companies cap transfer fees at $25-50. Still other cards only waive fees for "initial balance transfers," then treat every subsequent balance transfer as a cash advance and charge the greater of $2.50 or 2.5% of the transaction amount as a fee.
2. Teaser Rates - Be sure to ask how long the introductory rate lasts, and find out what the card's annual percentage rate is after that teaser rate expires. If possible, it’s best to focus on paying down the transferred balance before the teaser rate expires. Does the teaser rate apply to transferred balances or new purchases or both? And last but not least, do you qualify for the super low-rate? While an offer may boast a 3.9 percent teaser rate that bumps up to 17 percent after six months, a person may only qualify for a card with 7.9 percent teaser and a regular annual percentage rate of 21 percent.
3. Late Payment Problems – It may only take one slip-up for that super-low rate to disappear. For example, you may start with a 9.99 APR, but one tardy payment bumps the rate up to 21.99. What about late fees and over-the-limit fees? Does that card have an annual fee?
4. Double Check - The new card company may send a notice saying the balance transfer is complete. But be sure to call the old card company to verify this. The old company should send a billing statement with a zero balance. If they don’t, request it.
5. Cancel Old Card(s) - First off, plenty of people out there have trouble avoiding the temptation of an open credit line. Second, too many open lines of credit can affect a person's ability to qualify for a mortgage or a car loan. Lenders view any open credit lines on all unused credit cards sitting in a consumer's wallet as potential outstanding debt.
6. Stick With It - Consumer experts urge people who transfer balances to a low-rate card to stick around for a year or more. If you jump from card to card you can’t build a credit history, and that can really damage your credit.
Comments
wow!..kool site. I love all the ideas. If you like, we can trade links. Email me. thanks.
Canceling old credit cards is not always a wise thing to do. The length of your credit history is one of the criteria that determines your credit score, so an older card will strengthen your rating. If you cancel an old card it may be a detriment to your credit scores.
Just call the credit card company and have them lower your credit limit to a manageable level that won't be too tempting or ruin your chances for a personal loan.
Lowering your credit limit could also impact your credit score. Having a limit of $500, with a balance of $400 is a lot worse than having a limit of $5000 with a balance of $400.
Becoming more responsible is the best solution.
One of the traps I've run into is where you sign up for a promotion, nice intro rate. Everything looks dandy. You're approved!* (Notice the *, they always get you.)
You activate the card. *Then you find out in a letter you'll get in the mail within 30 days that unfortunately, you didn't qualify for that super-low rate you were looking for, and only a portion of your balance was trasferred. Meaning now you have a card with a partial balance, and a new card with a partial balance and an introductory rate that you're about to lose.
Chase did it, they'll do it again.
let's face it. pretty much any move you make for your own good that might keep a few shekels out of the credit card companies' pockets will hurt your credit score. damned if you do...
I agree, cancelling credit cards is not a good option. But having too many credit cards is bad is not good for your credit history either. It's awlays hard to find the golden mean. It's bad to have no credit limit and it's bad to have low credit limit. You are always on the horns of the dilemma...
One "tip" that will help people trying to consolidate credit card debt and get better credit is to stop paying with plastic and start using cash. Yes, it's old fashioned, yes it's hard to always have the cash on hand. But, because it IS hard to do this, you wind up spending less because cash is REAL MONEY and when you hand it over, you see it going, going, gone! Just this simple change in behavior is enough to make impulse purchases a thing of the past. These tips in this blog post are excellent ways for people to consolidate debt and give themselves a fresh start. Good work!
One of the best tool thats free is the opt out number. you call it and you dont get all those tempting card offers, and it raises your credit score a little.
I noticed the suggestion to close old credit cards. I've personally found that keeping the old credit cards active has worked well.
If you will keep (or increase) your credit limit with that credit card and use it once every six months -even for a minor purchase), you will improve your credit score.
The goal is to keep a high credit line, and maintain 25% or less of that credit line. 10% of the credit line is your best scerenio, I've found. It proves that you can manage your credit well, despite the temptation.
this is a great side , it gave some idea to the person what they should do, how ever it would be nice to sugest a good company with no scam for consolidation or if someone wants to consolidate CC on his own what kind of letter or responce should be send to thier creditors, that would help a lot.
Michael.......email mgray08043@yahoo.com
If you guys any more details you can check this Credit Card Debt, I warmly recommend it. You'll definitely find whatever you need.
Hi..guys..
nice to see you all
i'm eager to share info along with You.
thankx
---------
Bob
The best online resources and information for
credit card debt.
[URL=www.stop-credit-card-d...]Stop Credit Card Debt[/URL]
Hi..guys..
nice to see you all
i'm eager to share info along with You.
thankx
---------
Bob
The best online resources and information for
credit card debt.
Stop Credit Card Debt
I agree...Credit card debt is a big problem. I have a $15,000 balance on my Visa and trying to get it lower. A friend of mine told me about a site CreditCardClients.com that can help save hundreds of dollars on credit card debt. I am goign to check it out...
I agree totaly.
Credit Card Debt
Credit Card
Compare credit cards with Australia’s leading financial
comparison web site, Credit world.
-www.creditworld.com.au...
Thanks for the information's. The web sites you gave are very helpful. I will recommend these web sites to my friends.......
Pathogen
Debt Consolidation