Minimize Your Credit Card Costs

Saturday, June 5, 2010, 3:26 AM | 5 Comments

Now that the new CARD Act is in effect for some time, experts tell us that the card issuers would look for different ways to make more money for themselves. They can charge annual fees, and / or raise interest rates or they can pull out an entirely different snake from their sleeves with enough poison that can kill your financial livelihood. It might not be such a bad year for the card issuer. On the same token, it might not be such a good year for the consumer after all.

Granted the protection to your card has been increased many folds in a variety of ways, but still the consumers should not sit on their ass and keep using their credit cards and keep spending.

Here are a few steps you can take to slash your credit card costs. In some cases, you need to pay the bill on time and have less burden on your monthly finances than worrying about your credit score. That will take care of itself in the long run:

Find out what interest you are paying

The first thing you gotta do is find out how much water you are standing in. Read your credit card statement what interest you are paying. If you took out a credit card with a low introductory rate during the past year or so, the rate you are paying now is most likely much higher.

If the interest rate is in the high double digit – in some cases in the mid-to-upper twenties – request a lower rate from the same issuer. If it does not lower it, think about switching to a card with lower rate.

Demand a better deal

You don’t necessarily have to accept what they are giving you. Show them that those days are gone when they would shove the credit card debt down the good and decent folks’ throat with or without consumers realizing it. If you pay your bills on time, an issuer may lower your rate by 2% to 5% at your insistence. Remember the credit card business by nature is competitive and therefore most issuers are struggling to keep customers.

Don’t discard your mail

You must be receiving credit card offers in your mail. If you do, save them over several months. Then go through them, one offer at a time, very carefully. Compare all the details. Call each issuer if you have to. There are definitely some offers that are worth less than the paper they were printed on. However, there are sometimes some gems, especially for short-term loans.

  • Caution

    If you use an introductory rate to pay off balances on higher-rate credit cards, keep in mind that you will have to either pay off the balance within six months [somewhat standard], switch to another card at that time or pay a hefty rate after the introductory period ends. You must put the time into finding a new card. If not, choose card that has a slightly higher but more stable rate.

Consolidate high-rate balances

It’s unfortunate that the average American cardholder carries balances on six or more credit cards. If you don’t pay the full balance by the due date every month, then consolidating several high-rate balances into a low-rate card can save you money in interest charges.

  • Here is how

    Call the credit card company to which you want to transfer your balances and ask for instructions of how to go about it. Some issuers, to not lose you as a customer, will do it for you. You fill out an authorization form and the issuer will pay off the balance you specify on other cards.

    There are some issuers who prefer to send you personal checks. You simply write a check to pay off other credit cards. The amount of the check or balance transfer will appear on your next statement, often as a cash advance.

  • Caution

    1. Be sure the interest rate for transferred balances is not higher than the advertised rate.
    2. Watch for steep cash-advance fees for balance transfers. Many issuers, though, will waive the fees on your insistence.
    3. Look for cards that offer interest-free 30-day grace periods on balances transferred over.
  • Read the fine print

    Even though under the new law, fine prints would not be so fine anymore, but still before you transfer a balance, check the new card’s fine print. Card issuers know that most people don’t sift through the fine print on their credit card offers. They have their own lawyers that have been studying the new law. Most probably, they would be looking for some loopholes. We as consumers don’t always have the luxury of our own lawyers. We are on our own.

In a Nutshell
Even though the credit card issuers will bring out new methods for filling their treasure chests, but under the new law, you still can beat them at their own created game. However, in order to do that, you must be organized and on top of your bills in terms of your saving and spending. Follow the age-old mantra: “Spend less than you make” and you would be on top.

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