Are credit card companies trying to help solve the current credit crisis? How does that affect me?
With the stock market falling, companies failing, and unemployment rising, no one needs to tell you that we are in the middle of a credit crisis. Although the current economic outlook may seem grim, this could be a chance for you to take advantage of some good opportunities. Credit companies are grasping at straws to attain new customers and also to keep their current customers happy. I’m sure you are bombarded with these letters on a daily basis, but next time, take a closer look. Some of these promotions might be worth your time. But before you jump into a new credit card, here are five tips to help avoid getting into financial trouble.
Introductory Offers and Balance Transfers: Read the Fine Print
If you’ve ever thought about consolidating your debt onto one card, it may be the right time to make the move considering some of the extremely low APR’s out there. Another good way to start lowering your debt is a balance transfer. Some cards offer 0% interest on balance which is a great chance to pay off your debt for free! However, please be sure you read all the details on time frames, fees, and penalties. Many times, cards will charge a hefty fee for transferring a balance, but if you really search you can find ones that charge nothing. Also beware that with any kind of introductory offer, you cannot be late making your payment. I can’t stress this enough. If you are late, usually your APR will immediately change and sometimes you have to pay back interest up to that point.
Don’t Be Afraid to Negotiate
Maybe you already have a card that you plan on keeping, but you think the rate is a little high – why not try negotiating? This is something that many people don’t realize they can do; but actually, you can negotiate rates, annual fees, and even settlements with your credit card company. If you don’t have any idea where to start when it comes to negotiating, here are a few pointers:
Tell them you’ve been shopping rates and there are better deals out there for you.
Threaten to cancel your card with them.
Play up the fact that you have been a longstanding customer with a good history.
More than likely, your company will be more than happy to work something out rather than lose your business. For a great place to compare credit card rates, check out Bankrate.com.
Beware of Cash Advances
Taking a cash advance is one of the biggest mistakes you can make as a cardholder. Credit companies especially push this “benefit” because it makes them a ton of money! They even go as far as sending you blank checks in the mail. Generally, the percentage rate on cash advances is far higher than regular purchases and even if you are using an introductory rate of 0%, it usually only applies to new purchases.
Look Before You Close
Your card, that is. Don’t assume that just because you are getting another card you should close all of your other ones. Also don’t assume that you are making your credit score better by closing them because that is not necessarily the case. Here are some situations where you shouldn’t close your card:
If it has a balance
If it is the card you have had the longest (it is always good to keep this one open as it shows a long credit history with one company)
If it is your only card (this will make it significantly harder for you to get approved should you decide to get a new card)
If it is your only card with available credit
Don’t Pay the Minimum
The surest way to stay in debt forever is to pay the minimum balance. Oftentimes, you are only paying interest and perhaps a dollar or two toward your balance. If you can’t afford to pay extra on all of you cards, then assess which ones have the highest interest rates. Putting some additional money toward high interest cards will ensure that you don’t get in to far over your head!
Below you will find a list of five major credit card companies, along with their customer service numbers and web addresses:
With the stock market falling, companies failing, and unemployment rising, no one needs to tell you that we are in the middle of a credit crisis. Although the current economic outlook may seem grim, this could be a chance for you to take advantage of some good opportunities. Credit companies are grasping at straws to attain new customers and also to keep their current customers happy. I’m sure you are bombarded with these letters on a daily basis, but next time, take a closer look. Some of these promotions might be worth your time. But before you jump into a new credit card, here are five tips to help avoid getting into financial trouble.