By Arthur Roberts
Of course, The best way to get out of debt is not to get into itin the first place - in other words, pay off your credit cardsfully every month. This is really the only way to be debt-free,enabling you to avoid interest and finance charges. None of themajor credit card companies (Visa, MasterCard, American Express,or Discover) penalize you for doing this.
The ideal is to live within your means, spending less money thanyou make. It is a sure way to stay out of credit card debt.
The Solution
But if you are reading this, chances are you’ve alreadyaccumulated too much credit card debt. Here are youroptions:
Option #1: One thing you can do if you have outstanding balanceson high interest credit cards, is to do a balance transfer ontoa lower interest credit card.
Of course you first need to have a balance transfer offer from acredit card company, with a card that has a lower interest ratethan the one you are trying to pay off. Visa, MasterCard,American Express, and Discover all have a variety of differentcards, with different interest rates. By transferring yourbalance to a card with a lower interest rate, you can savehundreds if not thousands of dollars in interest charges. Youcan compare these cards online (see resource box at bottom).
If you get lots of offers (as you will if your Equifax Score ishigher than 690 - rated "good" - and you may even get a fewwhile rated "fair") you will be able to pick and choose amongbalance transfer offers. Look for ones that keep the low rateuntil you have paid off the balance transfer completely. In somecases, you may want to accept one that raises the rate aftersome months, as long as that new rate is lower than the one youhave on the card you are trying to pay off.
Sometimes the best balance transfer offers come with a newcredit card. You will find reviews of some of the best at
A Few Things to Remember
For ease in understanding, we will call the high interest cardyou are paying off Card A, and the one you are transferringbalances to, Card B.
1. Be careful to continue making payments on Card A. until yourpayment shows up (you can check most credit card balances on thecredit card website, by logging into your own account.)
2. Try to time it so your transfer pays that month's payment. Dothis by making the balance payment right away when you have justreceived your statement for Card A. That gives several weeks forthe payment to post. Then you will not need to make a regularpayment that month and can apply more to some other card.
3. Experts vary on their advice about what card to pay offfirst. I prefer to pay off the highest interest card first, butothers say the satisfaction of paying off a card with a smallerbalance (because you can pay if off quicker) is important toyour motivation to keep paying down that debt. I get mysatisfaction in seeing the interest and minimum balances dropdrastically as I pay down the very high interest rate card.
4. Be careful to leave a few hundred on Card B so its nextinterest charge will not make you overdrawn. Apply as much asyou can to Card A, but not all of it.
5. Be aware that almost all cards doing balance transfers with avery low interest rate offer are going to apply any payments youmake to those lower transfer balances first. So it is best ifyou only do a balance transfer to a card that is totally empty.If you have charges on it at its normal interest rate, they willcontinue to accrue finance charges at the higher rate all thetime the lower rates transfers you did later are being paiddown.
Option #2: You can also transfer your balance from a highinterest card to one with a low introductory interest rate – Ifyou are like most of us, you probably get these in the mail allthe time. "Limited time offer!" "Pay no interest for 6 months!""0% till next May!" All of these cards offer an introductory lowAPR (sometimes 0%) when you get their credit card. But you haveto be careful if you use this option. Use it only if you plan topay off the balance BEFORE the grace period ends. If not, youmight end up paying more than you would have originally.
Option #3: Another option is to get a credit card debtconsolidation loan - it can take a lot of the stress out oftrying to juggle credit card accounts. It allows you toconsolidate all your credit card debt into one easy payment at afixed interest rate. This rate is almost always lower than theone the credit card companies will give you. The draw back isthat you have to be very careful who you get such a loan from,especially is they promise they will negotiate lower credit cardpayments, so that you are not paying all you owe. If it is froma credit counseling agency like that, it may harm your creditrating.
Before applying for any credit card, you may want to discusswith your financial advisor which credit card's best for yourunique financial situation.
Article Source: www.ArticlesBase.com
