You just got your low-interest credit card after applying for it. Now you want to know what to do next. You can do more than just run out and buy different things. There are a few things to keep in mind that can save you a lot of money in the long run. Low-interest credit cards can help you save money by letting you transfer balances from cards with higher interest rates and by letting you make big purchases that you can't pay off in one billing cycle.
Transfers of Money
If you have marks on your credit report, it can be hard to get a low APR, so if you got one, you probably already have another credit card. If this is the case and you have a balance on the card with the higher APR, you can now save money by lowering the amount of interest you have to pay. If it's possible to pay off the whole balance, you should do it. This is the best way to save money every time. If you are sure that the balance on the card with the higher rate will be with you for a while, it might be best to move the debt to the new card with the lower rate.
The first thing you need to do is find out which of your credit cards has the highest interest rate. If you have more than one, look through your bills carefully to find the APR for each one. If you can't find this information, call the person you owe money to and ask. They will be happy to tell you anything you need to know about your account. Ask them how you can lower the APR on your current account while you're on the phone with them. The creditor might be able to help you if there is a way to do it.
Once you know which APR is the highest, you can move the balance to your new credit card with the lowest interest rate. There are a few ways to do this, but the safest way is to call the creditor you want to transfer the debt to and ask them how to do it. Since they will get your new balance, you can be sure that they will give you all the time you need.
If you have enough room on your new card, it might be smart to move as many balances as you can to this low-interest credit card. You'd have to use your best judgement here, but if you have to pay finance charges, you might as well pay the least amount possible. Remember that if you can pay off a card in full, you should always do so. Transferring debt doesn't get rid of it; all it does is move it to a better place.
Once you're done transferring debt, do everything you can to stop using your cards with higher interest rates. Once your APR is at a level that you can handle, charging up the other cards won't help. In fact, having more than one card with a balance will make things worse. Also, don't forget that you should never be late on a payment for your low-interest credit card. Your APR can go through the roof if you don't pay on your new card, no matter what the balance is. Some APRs by default are around 32 percent or higher. This takes away any benefit you were getting from your new low rate card.
When you can, pay more than the minimum payment every time you get a bill. No matter how low your APR is, just making the minimum payment won't help you get out of debt. The whole point of transferring your balance is to get a lower APR and pay off your debt, not to spread it out over a longer time.
Large Purchases
You should only carry a balance when you have to. You've heard this before, and there's a good reason for that. There is no finance fee if you don't have a balance (although other fees may apply). But if you need to buy something that you know you won't be able to pay off in one billing cycle, your new low-interest credit card will help you out. With a lower APR, you can pay less in finance charges, which lowers the amount of debt you could end up with over time.
It's important to say again that making only the minimum payment won't get you where you want to be. If you make a big purchase and only pay the minimum, you will be in debt for a lot longer than you need to be, and it will cost you a lot more than it should.
