Archive for December 2015
Your Best Strategies for Balance Transfers, Debt Reduction and Credit Card Issues After The Holidays
Now that they’re over (the holidays) and the fun and merriment of both giving and receiving
gifts has become a thing of the past has your holiday cheer started to turn to anxiety and
worry over racking up a larger credit card balance?
Worried about your credit score?
How to pay the cards off?
Unsure about whether to apply for more credit or to transfer a balance to another card?
You’re not alone. And, it’s not your fault.
Well….maybe you did go a bit overboard, but there are literally billions of dollars spent
every year trying to convince you to overspend.
The social pressure is killer.
And, you’re a good person, you want to be kind, and many people are nice to you and deserve a gift in return.
So what now?
Well… take a deep breath.
Relax (you’ll feel better) and let’s look at the options and what really works …or doesn’t.
Let’s look at the traps, pitfalls, and the best way outta this little mess.
First, you should know that there are a lot of balance transfer credit cards out there, designed specifically for anyone who is carrying a balance on their credit card and paying high-interest fees each month. In fact, there are so many it can be challenging to determine how one is better or worse than the others. We took an in-depth look at some of the card offers out there to answer the question “is it good to transfer a balance from a high-interest credit card?”
The short answer is that it can be a great choice to transfer a balance and it can save you hundreds or thousands of dollars if you’re currently paying interest on another credit card.
But, and this is a big one….you have to understand how your credit score works and some fundamentals about getting rid of debt (click here for the debt free Bible Holiday Discount Offer) (to learn more about FICO click here).
And the bottom line is that if you apply and qualify for a new card then it might help your credit rating . However, you cannot add more to the balance. You will have to use the low or zero interest rate period to methodically payoff that credit balance before the introductory period runs out. Add to the balance will probably hurt your credit and get you deeper into debt.
So if you’re going to do a balance transfer, look for a card with the combination of a lengthy 0% intro APR and no balance transfer fee. The in-depth answer, as well as the card’s pros and cons, is explained below.
A strong solution, would be a card offering a 15-month 0% intro APR on both balance transfers and purchases. A shorter into is fine but remember, you have to get that balance paid off during the introductory period.
Many cards offer a 0% intro APR, but you’re looking for a card where you won’t pay any balance transfer fees to move your balance(s) onto the new card.
That’s a huge win, since these fees are typically 3% of the balance you’re transferring, which can add up to big money. For example, if you’re transferring $10,000 you’d probably pay $300 in fees with many cards – and that just adds to your woes.
In review, ideally, you should try to find a card where you pay absolutely nothing to transfer your money, and where you have 12-15 interest-free months to make payments against the balance.
For example, if you were making $700 monthly payments on that $10,000 balance and had a 20% interest rate, it would take you 17 months to pay it off and you’d pay over $1,500 in interest. If you transferred that balance to a new card with the features we’re reviewing, you’d pay it off in 15 months with no interest, saving $1,500 and paying absolutely no fees. Also, make sure you transfer your balance in the first 60 days (or the permitted time) to take advantage of the as after that time there will frequently be a fee.
In addition to the 0% intro APR on balance transfers, you’ll also want a card with no or low interest on purchases and if possible, a lower permanent APR or interest fee. This is a great way to make any big (or small) purchases you need and save money on interest fees for over a year. If you’ve been known to make a late payment or two you’ll appreciate a card that has a no penalty APR.
This means your interest rate won’t increase if your payment is delayed. We don’t recommend ever, or worse yet, habitually, paying your bill late, but it’s nice to know if it does happens you won’t be penalized for it in the interest rate.
NOTE HOWEVER, that late payments will affect your credit score and this may drive other costs such as loan interest rates, car leases and other costs including insurance higher. Pay on time and reap the advantages of a better FICO score.
Other Things To Consider
So to get a handle on what’s out there and if things like foreign travel fees and travel or other rewards are important to you then check NEXT’s Balance Transfer Calculator to see which card is the best choice for your particular situation. We have no relationship with that site but it does offer a good side by side review of a number of different.
Whatever choice you make, consider our Debt Free Bible to help you to reduce or eliminate debt and those burdens from your life and/or Our Credit Repair Intelligence System to make sure you clean up and understand your personal credit.
Want the best deal?
Get a discount and a jump on a better 2016 and beyond when you order both…just click here for our new year 2016 discount offer and make 2016 the year when you get things under control.