How to Avoid the Credit Card Fiasco
Every year you plan to avoid the credit card fiasco, and even make a wholehearted attempt to purchase all of your holiday gifts with cash. If you’re reading this article, chances are you ended up using your credit cards more than intended! Don’t despair though; there are some tried and true methods as debt consolidation of fixing your holiday credit card slump that you can put into action right away. Here are some strategies to climb out from underneath the holiday credit card slump- and help you pay off those purchases quickly so you aren’t still paying for them by the time the holiday season rolls around again next year.
Use Introductory Offers to Your Advantage
After the holidays many credit card companies release special introductory rates to entice new customers to apply for their cards. If you can find one that offers 0% interest on balance transfers for a year, you’re in! You can transfer your holiday debt from the various cards that you used, and pay it off without hefty interest rates. Another benefit of this technique is the fact that you’ll have a single payment even if you had used several credit cards for holiday shopping. Once you combine all of them on the new 0% balance transfer credit card, you’ve got a single, monthly payment! (You might consider closing some of your other credit cards).
If you are unable to find a 0% interest rate on balance transfers for twelve months, you might be able to find a six month introductory offer. This is still worth the time and effort to transfer your balances as you can work to pay them off before the six months is up (or at the end of the six months move the balance to a new card with a 0% balance transfer offer!)
Credit Card Checks
If you don’t qualify for a 0% interest introductory balance transfer offer, you could consider using the checks that often come with your credit cards. (Sometimes you have to request them from your credit card company). While the interest rate might not be zero, and it may not be any lower than the card that offers the credit card checks to you- if you have balances on several credit cards, writing a check to pay off each card means you would only have a single monthly payment. In the long run, you would save immensely on interest and finance charges by having a single account. In addition, paying on a single account instead of three or four (or more!) will help you pay off the outstanding balance much faster.
Request Lower Rates
In some cases, credit card companies are able to lower your interest rate just because you’ve asked them to! It certainly doesn’t hurt anything to pick up the phone and call your credit card company’s customer service line to request a lower interest rate. When you’ve gone overboard with your holiday spending, you can really save on the total amount you end up repaying just by having a lower interest rate.
Get A New Card
Ideally, you will want a card that will allow you to move all of your other credit card balances onto, and at a 0% balance transfer rate. There are times when you can’t get approved for the best offers, or times when you just have more outstanding debt than the offer allows you to transfer.
If this happens to you, you might consider getting a new credit card that will allow you to transfer your entire debt from all of your other cards, and one that has a reasonable interest rate on the transferred balances, so that you can start making a single monthly payment rather than several.
The Way Handle Your Debt
We all, over the course of our lives, sometimes rely on credit to get by. Whether it is for a mortgage on our home, a loan for a car, or a payday loan to get by until next Friday, there’s little we can do to escape the effect of a debtors society. But the way you handle your debt is something you can have a say in, and indeed the way you do so could mean you save – or spend – thousands of dollars a year.
Let’s imagine you have a few credit cards on the go. One of them, the card you had since you were in college, has a few grand racked up on it, and because you missed a few payments way back when, the interest rate is at 19%.
But most of us never look at the interest rate we’re paying, because, quite frankly, we don’t give it a second thought. MasterCard says we owe them $184 this month, so we pay $184.
But it doesn’t have to be that way. Many credit card companies will give you a card, albeit with high interest after a period of time, that for the first 6 months to a year comes with 0% interest on all credit card transfers. What this means is, if you use your new card to pay a big chunk of your old card, you pay no interest on the new card for a set period of time.
Now, of course once that time is up, they’ll put you right back on the expensive interest rate, but for a short time, the money you pay on your credit card is ALL-principal.
Credit card companies don’t like you doing this too much – in fact, they’ll put it on your credit card report if you do it more than a couple of times – but if you’re looking to get out of a short term financial logjam, look for those introductory offers and use a new card to pay off your old card.
Help Your Finances
Restructuring your debt will help you gain control of your finances once again. You can consolidate payments into more manageable amounts at a lower rate. Or you can also turn to third parties to help you deal with your creditors.
Taking Advantage Of Debt Consolidation
Using a debt consolidation loan will help you take charge of your monthly payments once more. Disposing of your high interest credit cards for a low interest home equity or personal loan can easily cut your rates in half.
By restructuring your debt with a new loan, you can also rearrange the payment structure. So you might decide to retire your debt with a small, easy to manage monthly payment over several years. Or you can opt for a short loan period with larger payments to quickly improve your debt ratio.
Once you have consolidated your bills with a new loan and retired old accounts, your credit score will have a minimal impact. And with regular payments, it will quickly improve.
When Others Can Help Your Finances
In some cases, you might want to turn to a company to help you regain control of your debt. A debt consolidation company can manage your short term accounts and lower your rates on credit card accounts, helping you to stay out of bankruptcy.
By turning over control to a third party, you save peace of mind and money. But your credit score will have a temporary decline as creditors place holds on new credit applications. For at least a year, they want to see that you will indeed be making regular payments.
If you just need some advice, a credit counselor can help you develop a budget with short and long term goals. They may also refer you to a debt consolidation company or other financial services. With their training, they can help you see your finances more clearly.
Check Before You Sign
Before you sign any contract, make sure you check out several companies before settling on one. Ask for the cost and compare it to others. Fortunately, the internet saves time when shopping for serves. In less than an hour, you can be on your way to better finances with a reliable company.