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Cut Your Credit Card CostsYou may not realize it, but you can save thousands of dollars a year by following some simple cost-saving steps.
The more cost-saving steps you follow, the more money you'll be able to save. However, to avoid from being overwhelmed with life changing steps, experts suggest that you begin slowly, adding more steps as you adept to your new lifestyle toward saving money. Your first step is to look at the
interest you are paying on your credit cards. If you're paying more than 12%, then you're paying too much. Consider this, the prime interest rate is in the single digits, if you have good credit, you should be able to find a lower
interest rate credit card. Make sure that your read and understand the terms and agreements as well as the penalties associated with overages and late payments. Many times, you can find 0% or lower interest credit card, which you will be able to transfer your balances of higher
interest rate credit cards to. This will save you an enormous amount of money by paying the no or low
interest rates. However, make sure to read the fine print before applying, so that you will understand if you can pay off or transfer your balance again to another card once the introductory period rate expires. There is a danger, however, in doing this if you do not cancel the old credit card. You could have too many lines of credit open and this will lower your credit rating, so make sure that you cancel your old cards. If you have a considerable amount in savings, then you may want to consider using part of your savings to pay off your consumer debt. Most banks offer less than 1% on passbook savings, where as most credit cards carrying 10% to 21% interest charges. By withdrawing enough to pay off your credit card debt, you actually come out ahead. However, you must be sure to leave enough in savings so that you do not harm your borrowing power in case of an emergency. Once you have paid off your credit card debt, close out these accounts. Experts recommend that you only carry 3 to 4 credit cards. If you either don't have enough savings or do not wish to touch your savings to pay off your credit card debt, then you may want to consider using a home equity loan. The danger here is that you are putting your home up as collateral. Home equity loans usually have a much lower
interest rate than many credit cards. In addition, the
interest of home equity loans can be deducted from your taxable income. Again, consider this carefully as you are placing your home at risk. Other simple steps of lowering your credit card cost are to avoid all finance charges and late fees on credit cards. This is especially true for cards with high interest rates, which can save the average person $100 a year in fees. Possible the hardest step is that if you do not have the money to purchase the item straight-out, then perhaps you should reconsider purchasing the item at all. Many people get deep into debt simply because of the, I want, and not because of a financial down fall or bad luck. If you have a balance on more than one credit card, then you should pay only the minimum payment on the lower
interest rate cards, and apply all of the rest to the higher
interest rate card so that you will be able to pay off this card sooner. Once you have paid off this card, then begin paying off the next highest interest rate card and so forth. Then as you pay off each card, either put it away or close the account. Credit cards should only be used when you have the money to pay off the balance or when you should not use cash, such as for making purchases over the Internet and in cases of emergency.
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