Wednesday, December 27, 2006
Should You Transfer your Credit Card Balance?
When forming a plan to eliminate your debt, transferring your credit card balance from a higher interest rate card to one with a lower rate can make your debt repayment move a lot faster. The lower your interest rate, the lower the finance charges and the faster you can pay it off.
There are a lot of 0% and low introductory rate credit card offers out there. If you are like me, you probably receive quite a few of them in the mail each month. However, finding a good card can take a bit of work.
When you are looking for to pay off your debt, time is often quite important. But you should take the time to find the best credit card balance transfer for your financial situation.
Most credit card issuers will offer you a 0% or a very low introductory interest rate on balance transfers. These intro rates often last for a period of time between 6 months and 12 months. After the intro period is over, the interest rate will increase. Some cards will offer an extension on the introductory rate as long as you make regular purchases on the card. Some are even beginning to offer a fixed interest rate on the balance transfer until it is paid off.
Take the time to shop around for the card that offers you the lowest interest rate, the longest introductory time period and the fewest extra conditions. You absolutely must read the fine print; it can contain provisions that affect your balance transfer, such as the fee of 3%-5% of the total amount transferred. The fee will be charged to your account as a purchase, which means you will pay interest on it.
Keep in mind that opening a new credit card account can temporarily lower your credit score, as will closing your old account. This can affect your ability to borrow other money or find affordable insurance premiums. You should thoroughly consider your financial goals before you open new accounts. For example, if you are looking to purchase your first home, you shouldn't take out a new credit card or other type of loan.
Balance transfers often take between 4 to 6 weeks. You will need to pay your minimum payments on your credit cards until the transfer goes through.
You should take the time to cut up your old card and close it. Then you need to pay it off. If you continue to use your card, you are simply adding more debt. You are just acquiring new debt, not paying it off.
Be aware that if you make a late payment on your new credit card will absolutely guarantee that your introductory rate will turn into the default rate, which could be as high as 30%.
Credit card balance transfers are a great work to reduce your monthly minimum payments in order to pay off you debt faster. If you are unable to transfer your entire balance, take the time to go ahead and transfer as much as you can. You will be paying a lower rate on every bit you can, which is a goal of paying off your debts.
Martin Lukac http://www.MartinLukac.com, represents http://www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com
Wednesday, December 20, 2006
Be smart and use more than one credit card
Many people who constantly spend on their credit cards do tend to worry about whether or not their card will be accepted. Having more than one card would increase your buying power and you would know that at least one card will be accepted. However, of course there are disadvantages with this option also. More spending power means that you will spend more; therefore you will acquire more debt! So, you always need to be careful no matter how many cards you have.
Another advantage if you have different types of credit cards such as a MasterCard and a Visa card, include the fact that you will be able to shop anywhere. Certain places do not accept certain cards so if you have a mixture you will be able to shop basically anywhere without needing to worry.
One thing many people do not realise is that different cards often have different features and that means that you may want to have more than one card for different things. For example, some cards offer air miles whereas others offer cash back. Take advantage of all the different offers to suit your needs. You can also get different credit cards to suit different things such as one card for your utility bills and one for your grocery shopping.
Overall credit cards do need to be used responsibly, but having more than one can be an advantage at times. Always ensure that you use your cards wisely in order to avoid getting into huge amounts of debt.
Friday, December 15, 2006
What Are Low Interest Credit Cards?
One bit of advice you'll often get when you're thinking of applying for a credit card is to look for one with a low rate of interest, or a low APR. It used to be traditional wisdom that your best option in a credit card was always the one with the lowest interest - but not anymore. It also used to be an accepted maxim that you couldn't get both low interest and great rewards in the same credit card - but that's changing as well. How do you judge the lowest interest credit card?
Credit cards are notorious for their high interest rates. Typically, credit card interest rates run about ten percentage points higher than secured or personal loans. Plastic offers the convenience of what's called revolving credit - you can continue borrowing against your credit account as long as you keep it under the stated credit limit and make regular payments on your account. You pay for the convenience of not having to reapply for a loan every time you use your credit card by paying higher interest on it than you would for a one off loan.
As credit card use has increased and the range of available cards has kept pace, the law of supply and demand comes into play. According to recent surveys by the FSA, there are currently enough active credit cards in circulation for every single adult in the UK to have four cards in his or her wallet. With the market for credit cards reaching saturation point, the companies that issue them have had to get more creative in marketing their products. That's meant interest rates coming down - the typical APR on a standard credit card these days is about 12%, down from 15+% just a few years ago.
That's just the start of the good news for users of credit cards, though. More importantly, issuers of cards have devised various schemes aimed at the way people use their credit cards in an effort to increase their use. Depending on exactly what your needs are, you can find credit cards with typical APRs of below 10% - and that's AFTER an introductory period at 1-5% APR on new purchases and balance transfers.
If you're shopping for a new or first credit card, there are a few things you should know about interest rates and APRs.
1. The higher your credit score, the lower APR you'll qualify for. The credit cards with the lowest APRs are usually reserved for those with good to excellent credit. If your credit is a bit rum, then you'll likely be offered a credit card with a lower credit limit or a higher rate of interest - or both.
2. Introductory rates are just that - introductory. Be sure to read all credit card offers carefully to find out just how long the introductory period lasts, and what conditions you have to meet in order to keep the introductory rate intact.
3. A low interest credit card can flip into one with an outrageously high rate of interest if you're not careful. Late payments often carry not only a one time penalty charge, but also a rise in interest rate that's permanent. Even worse, if you're late with a payment on one credit card, the interest rates on your OTHER credit cards may also rise.
4. Knowing your credit rating can help you apply for appropriate cards. When you compare credit cards at comparison sites, you can see at a glance whether the card issuer is aiming for those with excellent credit, or those with no credit or poor credit.
5. Don't apply based just on a low APR. Be sure to compare credit cards on all fronts, not just interest rates. Check application fees, annual membership fees, processing fees, late fees, balance transfer fees - the whole ball of wax. And remember that these days, there ARE low interest credit cards that offer great rewards. Balance all the information you can find to decide which is the best credit card for your wallet.
Jon Francis has been involved in various areas with the world of finance and has a keen eye for a bargin! He has an in-depth knowledge of the credit card UK market and now helps others get the best from a credit card.
Wednesday, December 06, 2006
Low rate credit card
Low and even zero interest credit cards seem, at least on the surface, to be the solution to increasing personal debt problems. The providers give the user the facility of very low or even no interest on credit for a certain period of time.
A small-print savvy and conscientious spender can doubtlessly benefit hugely from a low- or zero-interest credit card. However, it seems that such users of low or zero interest credit cards are more an exception than the rule. There are various low-interest credit-card-providing banks contending with each other for a piece of the market today.
HSBC offers a low-rate credit card that charges 0% interest for up to twelve months and interest rates from 10.49% upward thereafter. CitiBank is also among the preferred low-interest credit card providers, as are American Express, ANZ and Chase Bank.