If you suddenly find yourself in a sea of high-interest credit card accounts, you may want to try a few self-debt-reduction strategies to make your monthly payments easier to handle and go further toward paying off what you owe instead of just paying the high interest rates.
Playing credit card roulette is a popular way to get more money out of your monthly payment without making more money or sending bigger payments to your accounts.
Moving Money Around
Transferring the balance to another card is one of the easiest and quickest ways to pay off a credit card. Even though you still owe the money, the original credit card will be paid off. Transferring your balance from one credit card to another is only a good idea if you can get a credit card with no interest or a much lower interest rate than the first one. This is because when you make payments on the transferred balance with the lower interest rate, your payments will go more toward paying off the principal and less towards paying interest.
Even though this may seem like a fun and easy way to cut your monthly bills, there are some important things to keep in mind when you use it.
Balance Transfers: Things to Think About
If you want to move your high-interest accounts to a lower-interest account, the most important thing to make sure of is that the new credit card with the lower interest rate will be approved for a large enough credit line so that you can move your whole balance. If you think that moving half of a credit card balance to a new card with a lower balance will help, you should think again. When you do that, you get YET ANOTHER credit card that you have to make payments on. Even though the new card has a lower interest rate, you aren't getting any closer to paying off your debt because you now have to make another payment every month.
When deciding to move balances from credit cards with high interest rates to credit cards with lower interest rates, it is also important to understand the terms of the new credit card agreement. How long will the low rate of interest last? Most no-interest or low-interest credit card offers are only good for a certain amount of time. When the promotion is over, your interest rate could be as high (or even higher!) than it was before. Make sure you understand the terms, and pay off the balance or find another card with a low interest rate to move the balance to before the promotional period ends.
You should know how long the low-interest or no-interest credit card offer is good for and what happens if you pay your bill late. If you pay any of your monthly bills after the due date, some cards will automatically switch to the highest interest rate allowed.
Don't pay the late fees.
You should set up an automatic payment plan for each of your credit card accounts. On the due date, the money is taken out of your checking account automatically. This way, you'll never miss another deadline! Credit card companies make a lot of money off of late payment fees, and they don't give you much time to send in your payment before it's due. When you get a credit card statement, you often have to mail your payment the same day if you want to have a chance of getting it in on time.
