Credit Card Costs and How to Reduce Them
Credit Card Costs and How to Reduce Them
During the last ten years, Americans have fully embraced the
idea of using credit cards to make purchases. In fact, the
average American household owes nearly $10,000 in credit card
debt. As a result, the credit card companies are reaping record
profits. These profits will undoubtedly increase with the
passing of recent legislation reforming Federal bankruptcy law,
which will make it harder for the average debtor to file for
bankruptcy. One of the reasons that the credit card industry is
so profitable is that so many of their customers fail to use
their credit cards wisely.
Anyone with good credit can easily obtain a major credit card
that has a favorable interest rate of 10% or less. In order to
keep that low rate, all the cardholder has to do is pay their
bills on time. Many customers fail to do so, however, and that
can lead to late fees that range from $15 to $29. Even worse,
paying late can cause the credit card company to raise the
interest rate on the account. A single late payment could cause
the interest rate to increase substantially, and there are many
credit card holders who now pay interest rates of as high as 30%
per year.
Interest rates that exceed 20% make it quite difficult for
anyone carrying a balance to pay off their bill in full, so this
is something that is best avoided, if possible. Should you pay
your bill late once and receive a late fee, it may be worthwhile
to call your credit card company and request that they waive the
fee. Most credit card companies will waive a late fee - one time
only. Some companies may refuse to do it at all, but it's worth
the cardholder's time to ask, just the same. Should your credit
card company refuse your request, it may be worth your while to
shop around for another card.
It is often possible to save money by transferring a credit card
balance to another card with a lower interest rate. Fierce
competition in the credit card industry has led to a flurry of
advertising where customers routinely receive offers in the mail
for low interest cards with great promotional offers. It is not
unusual to receive an offer in the mail for a card with a
temporary rate of less than 5% if you transfer your existing
balance to the new card.
Be aware that these low rates often apply to transferred
balances only, and may not apply to new charges. Also be aware
that these promotional rates are usually limited in time;
typically the limit is six months or less. Higher rates may
apply to existing balances after that time period expires, and
the new, higher rates may even be applied retroactively.
Cardholders are advised to carefully read the fine print in the
cardholder agreement.
A few good tips for reducing credit card costs are:
*Take the time to shop around in order to find a card with the
lowest possible interest rate.
*Always make your payments on time. An easy way to do this is to
pay on the Internet. This eliminates the possibility of a check
being lost or delayed in the mail.
*Move balances from high-interest accounts to low-interest
accounts. Keep a sharp eye out for cards with low promotional
interest rates and transfer your balances to those accounts.
*Use your credit cards carefully. If it is possible to pay cash,
then pay cash.
*Always pay your balance in full, if you can.
*Try not to take cash advances unless you must; the fees and
interest on a credit card loan can be high
These simple steps will help you keep the sometimes considerable
costs of owning a credit card to a bare minimum.
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com