Shopping, Switching, Saving on Credit Cards
- Tuesday, July 25, 2000
Financial institutions nationwide are competing fiercely for your bank card business. As a result, many banks are offering cards with no annual fee and/or a low-interest introductory rate (some as low as 0%-3.9%).
Meanwhile, the average fixed and variable interest rates range from 15% to 17%!
Should you shop? You bet! If you carry a balance on your card you can't afford not to.
Even if you regularly pay off your credit card balance, make sure you're not paying an annual credit card fee.
However, if you currently have a credit card through your bank or another issuer, don't be too quick to drop it and switch. Because of the competition and the consistently high profits, many issuers are willing to waive their annual fees and/or reduce their rates.
"You'll probably get the fee knocked off and the rate lowered, but it's not going to happen unless you make that phone call," said Robert McKinley, editor of CardTrak, a newsletter that tracks credit card rates.
Plus, that simple phone call may save you the hassle of switching cards.
"If they won't lower your rate," says Ruth Susswein, former executive director of Bankcard Holders of America, "that means they don't value you enough as a customer."
The ultimate goal for everyone should be to pay their credit card balance off in full each month, so they don't waste their money paying interest charges. Credit card debt is one of the most expensive types of loans you can carry.
If you're trying to eliminate your balance, make sure that you always pay more than the minimum due on your monthly bill. If you don't, it could take you more than a decade to pay off a $2,000 debt, and most of those payments will go toward interest.
Many companies lure you with teaser interest rates guaranteed to stay at a reduced level for six to 18 months. After that time, however, the rates increase back up to normal levels, i.e. 12% to 17%.
Should people feel guilty for jumping from one teaser offer to the next in order to take advantage of low-interest rates?
Certainly not. The banks are still making a solid profit, it's just not a big one. And, they certainly don't feel bad about charging you 15% to 17% interest.
The thing you want to look at when making the jump is how long will those teaser rates last? Because you don't want to have to shop and switch cards any more than necessary.
One of the best tools I've seen to help people eliminate credit card debt-or any loans for that matter -- is a software product through Christian Financial Concepts called SnapShot Gold. If you're not a computer person, take a look at a book called Debt Free Living.
Reprinted with permission from No-Debt Living Newsletter, copyright 2000 No-Debt Living. Robert Frank is editor of No-Debt Living Newsletter which provides financial, consumer and time-management news with a Christian perspective.
Click here to download two free issues of No-Debt Living, or subscribe to their monthly newsletter.
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