|
 |
Money Saving Credit Card Tips
Author: Michael Smith
Website:
Added: Fri, Aug 25, 2006 19:29:23
Category: Credit
|
|
Credit cards are a primary source of debt problems for millions of people around the world. The best way to avoid these debt problems is to simply avoid credit cards, but that's not practical for most of us.
If you're having credit card debt problems, now's the best time to learn how to reduce your credit card debt and take advantage of these money-saving tips. These tips can help you save thousands of dollars, and if you're not already in debt they can help you stay that way!
The first way to reduce your credit card debt is to shop for a card with a lower interest rate and transfer the balance from the card with the highest rate to the new, low-rate credit card. You may even be able to transfer the balance of two or more cards to a single, low rate credit card.
Once your interest rates are the lowest you can find, the quickest way to reduce credit card debt is to pay off the card with the highest interest rate first. Of course all your creditors expect at least the minimum payment each month, so you can't ignore the other credit card debt while you pay off the most expensive.
Instead, just pay an extra amount each month on the credit card with the highest interest rate.
Even if you normally pay off your debt every month before being charged any interest, you should find the lowest rate possible so that in a month when you can't pay off the entire balance, the interest you pay will be lower.
If you have savings, you should consider using a significant portion of your savings to pay off credit card debt. Most savings accounts pay very little interest and you're probably paying twice as high a rate for your credit card debt as you earn in interest on your savings. You should keep an "emergency" fund in savings, but if your debt is growing you need to pay it off quickly, even if you have to dip into your savings.
Next, never use a credit card when you can pay in cash. Credit is convenient, but if you miss a payment, you'll be charged interest, and your original purchase will ultimately cost you more. Paying with a credit card gives a false sense of just what you can afford. Since cash isn't physically leaving your hands, it's easy to ring up a large bill and the surprise comes at the end of the month!
As a last resort, consider a home equity loan to pay off your credit card debts. A home equity loan usually carries an interest rate that is often less than half what you would pay in credit card interest, and the interest on a home equity loan could be tax deductible. Proceed with caution if you choose this option. A home equity loan is a mortgage and if you default on the loan, your home will be taken away.
About the Author:
Michael Smith is a Certified Financial Planner from Baltimore, Maryland
|
|
|
 |
|
Search our article database!
|
|
Finance 