As a number of credit card companies take steps to increase interest rates, many consumers are left feeling helpless. In fact, there is a way to minimise the impact of these higher rates on the household budget, and still enjoy the benefits of using the cards when and as you need them. Here is what you should do.
First, transfer your outstanding balances onto a card that has the lowest rate of interest you can command. As you decide which card is the best for this process, take the time to investigate any rumblings that the provider is considering increasing rates in the short-term. While many companies are thinking of increasing credit card rates, not all of them will ultimately do so. By transferring your balances to the card with the lowest interest rate, you’ll save money in the long run, as well as enjoy the ease of keeping up with one monthly payment rather than several.
If you have low balances, pay them off as soon as you can. Start with the card with the lowest balance, and pay extra until it is retired, then repeat the process with the card that has the second lowest balance, and so on. You’ll soon be out of debt and have no cares about what the interest rates are currently, since you will not carry a balance.
Consider going with prepaid credit cards. You can load the card at the first of the month, and use it for whatever you like. Once the balance is gone, you simply do not spend any more until you reload the card at the first of the following month. You’ll be surprise how much this cuts down on impulse buying, which in turn prevents your household budget from experiencing a great deal of distress.
Getting rid of those balances and paying for new purchases in full during each billing period will effectively minimise the impact of credit card rate increases, while still allowing you to enjoy the convenience of using plastic for all your shopping. Look at your situation today, and plan a strategy to accomplish these goals, and you’ll soon find that those rate increases have done you more good than harm.
Tags: Credit Cards
I’ve got to agree. If you have credit card balances keep on top of them and move to get the best rate, but remember to check the repayment on your new card. Paying off 1% per month on a 2000 balance will take you more than 8 years even at 0% interest – think of all the transfer fees! Set the highest monthly payment you can afford and make the most of the cheap rate