Make Lower Credit Card Interest Your Number 1 New Years Resolution
It's New Year's Resolution Time Again and while you're writing your
list for 2010 it's important to make your financial health a priority. Credit Card interest has a way of creaping up on people, building slowly over time. It can be a real budget buster when you have a much higher interest rate than necessary. The last year has been a particularly rough one for borrowers. Many banks and credit card companies have dramatically raised interest rates to as high as 32%. Generally the credit card companies do this without making it a point to tell their customers. A great 2010 New Year's resolution is to ensure that you are paying the lowest possible interest rate on all of your credit cards. Let's look at a few ways to achieve this task.
1. Check each of your credit card statements and verify exactly what interest rate you are paying. This is titled Annual Percentage Rate (APR). Your goal is to get the lowest interest rate possible. Many people are surprised to find the interest rate they are paying increased greatly during 2009. While credit card companies are required to notify you of any changes, they often do this by mail via a letter burying the changes within small print and legal text. Most consumers don't even read these letters. So be prepared to be shocked by the rates that you are paying.
2. Prepare a list of all of your credit cards including your current balance and the interest rate (APR) that you are paying.
3.Now let's do comparison shopping amongst the banks and creditors. You'd be surprised at how low some of the available rates are as banks often offer a super low APR to obtain new clients. They also encourage the transfer of balances from higher interest rate credit cards. These special promotions can save thousands of dollars over time in comparison to your existing high interest rate credit cards.
4.After compiling a list of available credit cards with low interest rates, go ahead and apply for the lowest interest rate cards. When approved, transfer your highest interest rate balances to your new card. If your line of credit permits it, you can often combine several high interest rate credit cards into one lower payment.
5.Once you've transferred the balances from your interest high interest credit cards, close those accounts. This will help protect your credit rating.
6.It may not be possible to transfer all existing balances to your new card. In this case, we suggest you contact those banks creditors and negotiate a lower interest rate. Most people do not realize this is an option that is available to them. Due to the current economy, creditors are more flexible about negotiating a lower interest rate or term. They understand that if you cannot pay the existing balance at the high rates they are currently charging, then you may opt out and not pay at all. The account becomes a total write off for the bank.
7.You may find some of your high interest rate creditors, such as Bank of America, are reluctant to modify your rates. While this can have an adverse affect on your credit rating, skipping a few payments will often bring them to the table. Most consumers are uncomfortable with this but unfortunately some creditors require you to play hardball to achieve your goal of lowering your interest rates.
8.If all else fails, you can advise the creditor that you are contemplating bankruptcy. This will often cause them to offer a plan with a fixed term pay off as low as 0% interest. You do lose use of the card during that time period, but it is a sacrifice well worth the lower monthly payments.
9.The fewer credit cards you have, the better. When you close high interest rate accounts it will often raise your credit rating and encourage banks and creditors to offer you even better rates and terms. Obviously this is a win-win situation for you. Your monthly payments decrease while your credit rating goes up.
10.In 2010 make it a goal to pay cash whenever possible and do not increase the amount of money you have built up in credit card debt. The interest rate banks currently pay on savings accounts, checking accounts and CDs are so low, that using cash is a better option.
The main goal is to just keep your finances in order. This resolution should be on top of your list for 2010. This is the perfect time to start breaking bad financial habits. Check your credit card rates and start making those important decisions we discussed above. Procrastinating will do nothing but drive you further in to debt, so get it done today!
by: Louis Fabiano
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