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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 costs.
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!
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