Paying down your debt (part 4)

Lowering your interest rates

In addition to getting rid of your highest interest rated bills, another great way to pay down your existing debt is to get your interest rates as low as possible. You can do this many different ways too.

Move balances around

One way to get your interest rates down would be to move your existing debt to a lower interest rated account. Because the majority of adults living in the United States (even those of you with horrible credit histories) receive credit card offers in the mail that provide low interest rate transfers (you’ve seen them) this is often an easy move.

You have to understand that it is vital for you know what the potential new credit card deal offers compared to your existing credit card. Watch for introductory rates. Some of these offers provide you only with a great beginning interest rate that will change after 6 months or so. Once the introductory period is over, the rat will increase. So, we aware of these rates ahead of time when considering the move. That’s not all you need to be aware of either. Also, some of these offers require a payment that may be higher than you can afford to pay each month. Think on these terms. Does the card have an annual fee? Is there a charge when you initially do the transfer? What is the interest on the balance transfer after the introductory period? How long ids the introductory period? Will your interest rates increase if you make late payment? Also figure out if the introductory rate will apply to any new charges on the new card id you should make one or some or does the introductory rate only cover the transfer amount? You have to think beyond the seemingly good offer in the mail. In this day and age, there is always a catch. You just have to be able to make the correct financial decisions for you based on these catches. Is your actual situation benefit from a transfer of debt from one card to another?

Transferring a credit card balance to a new card and letting your old card expire does not close out your account. So be aware of this and close the account – especially if it carries an annual fee! Certainly do not use this old account to make any new purchases. Be sure to contact your old card’s customer service department have the account closed – at your request. It has to be reported to the credit bureaus that this was done at your request or potential new creditors may be leery seeing a closed account on your report.

Shopping rates

Another way to lower your rates so you can eventually pay down your debt is to look for the best rates you can get. In fact, you will want to start by calling your existing creditors and let them know you are actively looking for the best interest rated loans on the market for your debts to be carried on. This only works if you have good credit, but if you have a good history with a creditor, they don’t want o lose you so they will negotiate better rate for you if so. Whatever your case may be, be very clear that you intend to move this account to any lender who can provide the lowest interest rate. You may be pleasantly surprised if your existing credit card company offers a good deal. If not, you tried at least. There are even people out there with great credit that are not making sure they have the best rates. Many consumers are complacent and think because they have good credit that he rates they pay are the best. This is not always true, so if this applies to you, inquire with your credit card companies today. It is not as though they will always (some do) adjust your rate to a better one automatically – they are out to make money.

If you apply for a lower interest rate credit card, be sure to call each of your existing creditors and ask for them to match the rate you applied for. Again, you may be surprised at the fact that they will match it so they don’t lose your business. Just remember to adjust your payments and use the money you save by rolling it into paying off the loans you have (highest rate first).

Be aware, the credit card company that charges you low interest on your balance transfer will apply your payments as it sees fit, between the low interest balance transfer and higher interest purchases. Usually the credit card company elects to pay off the low interest rate balance transfers first, leaving you with accumulating the higher interest charges on the new purchases so pay attention.

Part 5...

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