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December 13, 2007
Get out of Credit Card Debt - Helpful Advice
I just read a news item on Google news where the headline read like this:
Clearing Debt by Getting More Credit Cards
What they are saying essentially is this, if you have a credit card with a 19% intertterest rate you should go apply for another credit card that has a zero percent APR.
Doing this can save you hundreds or thousands of dollars on interest costs and that is a very good thing. I fully agree with this approach as the zero percent introductory rate will help you dig out of credit card debt.
What you need to know when you do this is that every time you apply for credit the banks report this to the credit bureaus and it will have an impact on your credit score if you repeatedly flip credit cards.
So make sure you are mentally ready to be responsible and take advantage of the interest saving by paying as much down as possible during the interest free period on the credit card. What I have been recommending for years is that you take advantage of the interest savings by paying what you were previously paying on your old credit card to bring the outstanding balance down quickly.
Another thing you need to know when you take advantage of an interest free card offer is that you must make all your payments on time otherwise typically you will lose the 0% APR and be paying a much higher rate, this is why I said you should take advantage of the introductory rate when you are mentally prepared so that you are sure to pay your card on time each and every month.
Also note that the interest free period usually only applies to the balance you transfer to the new credit card offer and new purchases and cash advances on the card will be charged at the banks ongoing interest rate. You should take the time to read through the card terms and conditions before you apply.
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