Using low interest credit card offers to actually help you get out of debt
Each day when I get home from work, the first thing I do is check the mail. It never fails, that almost every day there's at least half a dozen credit card offers promising me everything from a chance to win a Mini Cooper to helping me get out of debt. I'm usually pretty cynical about offers like this. After all, I'm sort of in the credit card business, even if my role is to inform consumers about the credit card industry. So, a few weeks ago I decided that if I couldn't beat them, why not join them? Why not take them up on their offer, and see how they may really help me get out of debt by using a low interest rate credit card? In short, I decided to take the credit card companies up on their offer, and call their bluff.
Immediately, consumer advocates are screaming that I playing right into their hands, but I think I can be smarter than the average debt-heavy consumer. Being smarter is how we can beat the system, and although it takes a little work, it can be done. Credit card companies are legally bound to disclose every aspect of their offers, this can work both for and against you. We'll get into this more a little later. For now, let's start from the beginning.
My first step would be to determine which credit card offers were legitimate, and which credit card applications to avoid. It makes good sense to me that any new credit card offer that I would consider, and recommend you to consider, would be a card that will enable you to take a step in the right direction. You don't want to take a step back by ending-up with a higher interest rate. In the same vein, you wouldn't want to apply for a new credit card only to end right back where you started. Choose credit card applications carefully by reading the fine print, and learning which offers will:
- Save you money
- Help you get out of debt faster
- Hopefully, qualify you for a lower interest rate
You've sifted through the mountain of low APR credit card offers, read the fine print and found a credit card that will work for you. Now what? Move forward and start chopping away at that debt, but proceed with caution. You've probably chosen a low interest credit card offer with a low introductory APR. Remember that word, “introductory.” I like to encourage people to take advantage of the momentum created by getting approved for a new low interest credit card, and start making aggressive payments on your debt. Make the credit card company live up to their promise of a low, introductory period.
Some things to keep in mind during your intro period:
Be smarter than they think you are
Credit card companies are experts at selling their products. Learn to see past the offer, to the bones of the program. This is more fine print reading, but this is where they have to disclose their genuine intentions. Call the bank if the fine print is too fine, and ask them your questions. And when you have them on the phone, granted you get the answer you're looking for, go ahead a apply for the credit card over the phone.
Be smarter with a calculator
A six-month rate of 2.99% with a balance transfer fee of 3% is actually 11.99%. Therefore, you’ll only want to transfer balances with rates that are higher than 11.99%. There are plenty of free credit calculators online to help you make this simple calculation.
Be smarter by keeping tabs on offers
Two important things to remember is that credit card companies can change their terms and conditions at any time, for any reason. So, any offer that was in your best interest three months ago might actually be costing you more today. Also, transferring balances to lower interest credit cards could be seen as some as an innovative approach to lowering your debt burden. And as with any innovative strategy, keep track of where you are on the timeline to paying off your debt.
Be smarter and never make a late payment
Late payments can destroy everything you’ve tried so hard to create. Late payments trigger clauses in the contract that label you a high risk, and you may no longer qualify for the lowest possible APR. It’s not hard to refrain from making late payments, but it’s something you should keep in mind.
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