Don’t Pay More for What You Owe

March 27th, 2008 • Related • Filed Under • by Debbie Dragon

If you have credit cards with balances, you’re paying more for the items you’ve purchased than they are actually worth. Even credit cards with “reasonable” interest rates will cost you a fortune over time, if you’re only paying your minimum amount month after month, and carrying your balance forward.

If it’s not possible for you to pay off what you owe in a lump sum payment on each of your credit cards, what you will want to look at is the possibility of obtaining a credit card with a no-interest balance transfer offer. These cards allow you to move your existing balances from another credit card onto the new card, at a promotional rate.

Your best option would be to select a credit card with a 0% interest rate on transferred balances for at least twelve months. These cards are a little harder to qualify for, and if you find you aren’t able to get one of these cards- you can look for a six month no interest offer; or a card that offers a fixed low interest rate for the life of the balance. All of the balance transfer offers will give you the opportunity to make repayments on your balance at low or no interest; which means all (or most) of your payment is going towards the principal amount owed. On a no interest card, it means there is no new interest accruing, and gives you the chance to get the account paid off without paying more for what you owe. In the case of a fixed rate, low interest for the life of the balance, more of your monthly payments are being applied to principle than interest, and you’ll be able to get it paid off much faster than you could on the higher interest credit cards.

In rare cases, you may be able to find and qualify for a credit card offer of no interest on transferred balances for the life of the balance. Typically, people with strong credit scores and repayment histories will be most likely to qualify for such an offer.

Regardless of which balance transfer offer you choose, you’ll want to do some research and evaluate a number of credit cards before you select one. Make sure that the one you apply for is the best offer you can find and are likely to qualify for, as you do not want to be qualifying for cards left and right as you look for your balance transfer offer credit card.

Your most important consideration when you transfer your balances to the new card is how you will handle your other credit cards. Be careful not to give into the temptation of using those credit cards that you’ve just transferred balances from, otherwise you’ve defeated the purpose of the balance transfer!