Top 10 ways to cut credit cards from your life
&Ldquo;It makes sense to pay off the debt with the highest interest rates first,” suggests debt reduction strategists, Fox Symes. “If you have three cards, all with the same balance but with varying interest rates of 10%, 15% and 25%... it makes sense to pay more off the 25% card. This will reduce your overall interest payments dramatically. Once the higher rate card is paid out, then you have smaller debts that are easier to manage.” This sounds counter-intuitive, but hear us out! If you apply for a new card with a promotional balance transfer rate, you will save hundreds of dollars in interest, allowing you to pay off your overall debts even faster. “Credit card balance transfers allow you to choose a reduced interest rate credit card for a honeymoon period of between six months and the lifetime of the debt,” explains www.creditcardfinder.com.au. “Just bear in mind that this is really only an option if you intend to pay off the card within the honeymoon period, otherwise you'll end up paying hefty interest rates, which will increase your debt.” Many credit cards offer rewards schemes as an incentive to use them, but these care usually attached to a hefty annual fee and a higher interest rate. “Often, you have to spend in excess of $20,000 per year to make any reward scheme worthwhile, and then the rewards are not commensurate to the amount of money you have spent,” warns Fox Symes. Ditch this card in favour of a low-rate credit card account, and you’ll significantly reduce your interest bill.Avoiding the Pitfalls of Credit Card Balance Transfers « Payday ...
As more of us struggle to pay off high interest debt, 0% or low rate balance transfers are coming to the rescue. Or are they? Balance transfers can be really handy, provided you’re aware of some of their shortcomings. Here is our list of the top 7 things you need to know when contemplating a balance transfer.
Always make your payments on time Most balance transfer deals have an introductory low or no rate period which is usually three, six, nine or twelve months. In order to make the most of your transfer you need to know when this introductory rate ends. Make note of the date and work towards getting the majority of your credit card debt paid off by this time.
Read the fine print Cash advances on a low or no rate balance transfer cards are a no no. These cards are really handy to pay off large amounts of accumulated debt, they’re definitely not designed for withdrawing cash or making purchases. Cash advances always attract a higher rate of interest and they’ll eat into any potential savings. In addition to a high interest rate, any cash advances will be treated differently from the transferred debt and can only be paid once the entire balance transfer has been paid off, see below for more information.
Don’t get tricked by payment hierarchy Payment hierarchy is something that all credit companies do and it can catch consumers out. Here’s how it works – you transfer a debt of 00 to your new 0% balance transfer card. You also use this new card to make 00 worth of purchases. Any payments you make will be applied to the debt that is attracting the lowest interest rate, in this case it would be the balance you transferred. Any additional purchases attract a higher rate of interest and would only be paid off once the total of your balance debt is paid.
Don’t leave it too late to switch A lot of transfer offers are only available for a limited amount of time after you’ve opened your credit card account. The key is to get the balance transfer happening as soon as you have the card in your hand. To help you with this, a lot of card providers give you the option of automatically transferring the balance and closing your old account upon activation of the transfer. This is a great way to make sure you’re making the most of the interest free or low interest period associated with your new account.