Credit Card Roulette

If you suddenly find yourself drowning amidst a sea of high interest credit card accounts, you may wish to try a few self debt reduction techniques to make your monthly payments easier to manage and go further towards paying what you owe rather than just paying on excessive interest rates.

Playing credit card roulette is a popular method of stretching your monthly payment dollars further without having an increase in income or sending larger payments to your accounts.

Transferring Balances

One of the easiest and quickest ways to pay off a credit card is to transfer the balance to another card! Obviously, you still owe the debt, but the original credit card will have been paid off. The only time it is recommended to transfer your balance from one credit card to another is when you are able to get a credit card with no interest or one with a much lower interest rate than the original credit card, as making payments on the transferred balance with the lower interest rate will result in your payments paying more towards the principal and less towards interest.

While this may seem like a fun and easy way to reduce your monthly expenses, there are some important things to keep in mind when you use this self debt reduction technique.

Important Considerations for Balance Transfers

Probably the most important consideration if you plan to transfer your high interest accounts to a lower interest account is to be sure that the new credit card with the lower interest rate will be approved for a large enough credit line so that your entire balance can be transferred. If you think it will help to transfer half of a credit card balance to a new card with a lower balance, think again. What happens when you do that is you suddenly have yet ANOTHER credit card to make payments on, and while the new card has the lower interest rate, you are still not gaining any ground for reducing your overall debt because you’ve added an additional monthly payment to your expenses.

Another important consideration when deciding to transfer high interest balances to lower interest credit cards is to understand the terms of the new credit card agreement. How long is the low interest rate good for? Most of the no interest or low interest credit card offers are for a specific period of time- and once the promotion ends the interest rate could be as high (or higher!) as your original credit card interest rate. Make sure you understand the terms and before your promotional period runs out, pay off the balance or find another low interest card to transfer the remaining balance to.

In addition to knowing how long the low or no interest credit card offer is good for, you should also know what happens if you pay your credit card payment late. Some cards will automatically revert to the highest allowed interest rate if you make any of your monthly payments beyond the due date.

Skip the Late Payment Fees

On each of your credit card accounts, you should set up an automatic payment arrangement. On the due date, the money is automatically deducted from your checking account, and that way you’ll never miss a deadline again! Credit card companies make a lot of money on late payment fees- and they don’t give you much time to get your payment in before the due date, either. Often, you’ll receive a credit card statement and need to put your payment in the mail the very same day in order to have a chance at getting the payment in on time.

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