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© 2007 - LoanQuotes.com
For concise advice regarding your own financial situation please consult with your own financial advisor.
Home | About us | Contact | Privacy Policy | Terms of Usage | Sitemap
© 2007 - LoanQuotes.com
Low Interest Rate credit card offers are great! Or are they?
By Stephen H. Dunham
"Balance Transfer! 0% for 7 months - 2.99% for 1 year - 4.99% or 5.99% or 6.99% for the life of the loan."
Have you ever received something that looks like that? I certainly have.
DIRTWORLD SPAM. That is just another word for junkmail that is not electronically-delivered, according to my friend's terminology for things not Internet.
Anyway, that is how I get them - or how they [try to] get me. Sometimes I will get 3 in a week; other times I get only 1 every two months. Many times they are from one of my existing credit card companies (that would be from the 4 or 5 with whom I have active accounts). Other times it is "pre approved" low interest credit cards and interest free credit card applications for a new credit card.
By the way, I immediately shred all such applications because I do not need or want any more credit cards. Nor do I want more creditors showing up on my credit record or more inquiries being made to my credit record. However, if you are still building your low fixed interest credit card gameplan, you will want to read this article before you send that next special offer through the confetti maker.
BALANCE TRANSFER - that is what it is all about. They want you to take their low-interest offer to pay off your balance at one of their competitors. Is it because they are nice and want you to save money on interest? Well, I would have to say "no".
Rather it is because they want your money, and your paying them less in interest is preferable [to them] than you paying them nothing. Also, they are fully aware that if you miss a payment on the rather large sum you just moved to their company (and hopefully consolidated lots of other credit card accounts to do it), they can jack up your rates sky high and have you obligated to pay lots of interest and for a longer period of time.
Be careful. Be very careful. Honestly, it could be a very bad thing. And, truthfully, it could be a very good thing. It all depends on the rules for your game and how you play it.
So let me tell you how to play the game - or at least share with you how I play it. And keep in mind that this is someone working to get out of debt and stay out!
First of all, know your own situation. How much debt do you have? What are the interest rates?
Secondly, read carefully. When you receive balance transfer checks, they are often accompanied by some sort of cash advance check that says something like "finance a luxury now that you can't afford, and pay for it for a long, long time". The balance transfer checks are usually the ones with the offer for the low interest rates.
Many times you are required to make them payable directly to the credit card bank you are paying off/transferring the balance from; other times you are able to deposit the check into your own bank account and make the payments yourself.
If you do the latter, remember what that money is for and make your payments immediately. Otherwise, you might find that you have merely increased your overall debt and paid nothing down.
Very importantly, use these low-interest balance transfer accounts for only that. Do NOT use that card for any kind of purchases, since that will begin tacking on high interest elements into your balance that you cannot pay down without completely transferring that balance to another one. That is because the lowest interest balance component is always paid first.
Also, understand what the term of the offer is. Does it say "for the life of the loan until paid in full." Or, does it say "through the payment cycle which includes April, 27, 20xx"? For the latter, be sure you know what the interest rate will go up to at the end of the offer. Offers for zero percent interest credit cards have their limits. Understand what they are.
Check your statement regularly to verify what interest rate(s)you are being charged. There may be several lines to decipher, such as
$13,009 at 5.99% = $xxxx
$ 1,600 at 16.99% = $xxxx
$ 938 at 19.67% = $xxxx
Yeah, it's not too bad that your $13,000 is at 5.99%, but you have over $2,500 at a very high rate that is accruing lots of interest. You might be better off transferring everything to 6.99% if you can, because the lowest rate is always paid first, while your highest ones eat away at your savings.
Thirdly, make your payments on time. Being just one day late can cause your rate to go through the roof. What's more, many different credit cards are offered through the same parent lender. So, let's say that you have a $200 balance on your CITI card and a $21,000 balance on your ATT Universal card - both of which are owned by Citibank.
If you miss a payment on your $200 card, you can and likely will see the interest rate on your $21,000 balance go up without warning. Then you will be looking to find an offer from Wells Fargo or WAMU or Bank Of America, or whoever. (Just for a little more fun, remember that banks are buying each other all the time, so it is always possible to wake up one day and see your credit card account owned by the one you left because you couldn't stand them).
My personal practice is to setup online bill payment through my checking account. Payments are scheduled for about 5 days before their due date. Setting this up has helped me not miss any payments for several years now.
In the event that you do miss a payment, call up the customer service department immediately and beg for mercy. This saved me maybe 50% of the time. Otherwise, look for another balance transfer offer. If they don't come in the mail, then you might find them when you log into your credit card account online. If you don't see one there, call one of your other credit card companies that is not owned by the one you fell out of graces with.
And if that doesn't get you a low-interest balance transfer offer, then search and apply for a new credit card account with a low interest introductory offer.
And as you see, while low interest rate credit cards can be a good thing, they are not always an available option. If you are a homeowner, you might also want to consider a Home Equity Line Of Credit.
Fourthly, diversify who your credit card companies for the reasons stated earlier. But, don't get too many accounts open either. Doing so increases your overhead as well as exposure for identity theft.
Fifthly, give consideration to each new offer. If everything is running well for you at 6.99% and you get an offer that is 0% for 6 months, it might not be worth it to alter your system and risk not being able to find a replacement offer by the end of the term. However, if you are at 0% for 5 more months, you might want to jump on 2.99% for the life of the loan.
Finally, the answer to the question "are low interest credit card offers a good thing?" is one you must provide the answer to. But now you are armed with some powerful information that, if properly wielded, will help you prevail.
All the best!
Stephen H. Dunham
Copyright 2007 LoanQuotes.com All rights reserved.
No reprinting or redistribution without express written permission
By Stephen H. Dunham
"Balance Transfer! 0% for 7 months - 2.99% for 1 year - 4.99% or 5.99% or 6.99% for the life of the loan."
Have you ever received something that looks like that? I certainly have.
DIRTWORLD SPAM. That is just another word for junkmail that is not electronically-delivered, according to my friend's terminology for things not Internet.
Anyway, that is how I get them - or how they [try to] get me. Sometimes I will get 3 in a week; other times I get only 1 every two months. Many times they are from one of my existing credit card companies (that would be from the 4 or 5 with whom I have active accounts). Other times it is "pre approved" low interest credit cards and interest free credit card applications for a new credit card.
By the way, I immediately shred all such applications because I do not need or want any more credit cards. Nor do I want more creditors showing up on my credit record or more inquiries being made to my credit record. However, if you are still building your low fixed interest credit card gameplan, you will want to read this article before you send that next special offer through the confetti maker.
BALANCE TRANSFER - that is what it is all about. They want you to take their low-interest offer to pay off your balance at one of their competitors. Is it because they are nice and want you to save money on interest? Well, I would have to say "no".
Rather it is because they want your money, and your paying them less in interest is preferable [to them] than you paying them nothing. Also, they are fully aware that if you miss a payment on the rather large sum you just moved to their company (and hopefully consolidated lots of other credit card accounts to do it), they can jack up your rates sky high and have you obligated to pay lots of interest and for a longer period of time.
Be careful. Be very careful. Honestly, it could be a very bad thing. And, truthfully, it could be a very good thing. It all depends on the rules for your game and how you play it.
So let me tell you how to play the game - or at least share with you how I play it. And keep in mind that this is someone working to get out of debt and stay out!
First of all, know your own situation. How much debt do you have? What are the interest rates?
Secondly, read carefully. When you receive balance transfer checks, they are often accompanied by some sort of cash advance check that says something like "finance a luxury now that you can't afford, and pay for it for a long, long time". The balance transfer checks are usually the ones with the offer for the low interest rates.
Many times you are required to make them payable directly to the credit card bank you are paying off/transferring the balance from; other times you are able to deposit the check into your own bank account and make the payments yourself.
If you do the latter, remember what that money is for and make your payments immediately. Otherwise, you might find that you have merely increased your overall debt and paid nothing down.
Very importantly, use these low-interest balance transfer accounts for only that. Do NOT use that card for any kind of purchases, since that will begin tacking on high interest elements into your balance that you cannot pay down without completely transferring that balance to another one. That is because the lowest interest balance component is always paid first.
Also, understand what the term of the offer is. Does it say "for the life of the loan until paid in full." Or, does it say "through the payment cycle which includes April, 27, 20xx"? For the latter, be sure you know what the interest rate will go up to at the end of the offer. Offers for zero percent interest credit cards have their limits. Understand what they are.
Check your statement regularly to verify what interest rate(s)you are being charged. There may be several lines to decipher, such as
$13,009 at 5.99% = $xxxx
$ 1,600 at 16.99% = $xxxx
$ 938 at 19.67% = $xxxx
Yeah, it's not too bad that your $13,000 is at 5.99%, but you have over $2,500 at a very high rate that is accruing lots of interest. You might be better off transferring everything to 6.99% if you can, because the lowest rate is always paid first, while your highest ones eat away at your savings.
Thirdly, make your payments on time. Being just one day late can cause your rate to go through the roof. What's more, many different credit cards are offered through the same parent lender. So, let's say that you have a $200 balance on your CITI card and a $21,000 balance on your ATT Universal card - both of which are owned by Citibank.
If you miss a payment on your $200 card, you can and likely will see the interest rate on your $21,000 balance go up without warning. Then you will be looking to find an offer from Wells Fargo or WAMU or Bank Of America, or whoever. (Just for a little more fun, remember that banks are buying each other all the time, so it is always possible to wake up one day and see your credit card account owned by the one you left because you couldn't stand them).
My personal practice is to setup online bill payment through my checking account. Payments are scheduled for about 5 days before their due date. Setting this up has helped me not miss any payments for several years now.
In the event that you do miss a payment, call up the customer service department immediately and beg for mercy. This saved me maybe 50% of the time. Otherwise, look for another balance transfer offer. If they don't come in the mail, then you might find them when you log into your credit card account online. If you don't see one there, call one of your other credit card companies that is not owned by the one you fell out of graces with.
And if that doesn't get you a low-interest balance transfer offer, then search and apply for a new credit card account with a low interest introductory offer.
And as you see, while low interest rate credit cards can be a good thing, they are not always an available option. If you are a homeowner, you might also want to consider a Home Equity Line Of Credit.
Fourthly, diversify who your credit card companies for the reasons stated earlier. But, don't get too many accounts open either. Doing so increases your overhead as well as exposure for identity theft.
Fifthly, give consideration to each new offer. If everything is running well for you at 6.99% and you get an offer that is 0% for 6 months, it might not be worth it to alter your system and risk not being able to find a replacement offer by the end of the term. However, if you are at 0% for 5 more months, you might want to jump on 2.99% for the life of the loan.
Finally, the answer to the question "are low interest credit card offers a good thing?" is one you must provide the answer to. But now you are armed with some powerful information that, if properly wielded, will help you prevail.
All the best!
Stephen H. Dunham
Copyright 2007 LoanQuotes.com All rights reserved.
No reprinting or redistribution without express written permission
