Is A Low Interest Credit Card The Best Choice For Bill Consolidation?
One of the more common methods used to decrease payments on credit card debt is through the use of low interest credit cards. These cards can be used for credit card bill consolidation, by transferring outstanding balances on other, higher interest cards to the low interest card. This means you pay less interest on the balance and can either make lower payments or continue making the same payment and pay the card off faster.
These low interest cards are often promoted as an alternative to getting a bank loan, particularly for people who may not be able to qualify for these loans. They aren't necessarily the best method of financial management, however.
The low interest rates that are being promoted often have conditions attached. It's important that you read the fine print, and make sure you understand the conditions and limitations fully.
The low rates are often only available if you have a good credit score. Many people who are dealing with credit card debt do not have the best credit rating, and as a result the interest rate could wind up being higher than what is initially being offered.
These special promotions are also usually only available for a limited time. The low rate may only be in effect for 6 months or possibly a year from when you transfer your existing balances. If you are not able to pay off the debt before the promotional period is over, you could be faced with larger bills than you already have with your current cards.
If you don't expect to have the balance paid off fully before the promotional period is over, be sure to double-check what the interest rate will be afterwards. You want to be sure you won't be stuck paying even higher rates than you do with your existing cards after paying other bills with a low interest card.
Getting A Lower Rate On Your Current Cards
Another alternative to consolidating your cards onto a single low-interest credit card is to ask for a better rate on your current cards.
The credit card industry is highly competitive, and if you have received a better offer from another company, your current credit card companies may be willing to either match that rate or at least lower your rate to something more reasonable.
A quick phone call to Visa, Mastercard, Amex or whatever type of credit cards you use is all it takes. Explain to the customer service rep that you have received a better offer and are considering transferring your balance or even canceling your account. Most companies are willing to negotiate with you, because they will lose your business entirely if you change cards.
Less interest paid to them is still better than none, from their point of view.
Read the next article for some warnings about electronic bill payment.