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The Fine Print Your Credit Card Issuer Doesn’t Want You To Read.
Our mailboxes are swamped with offers for low cost credit card with rates of 6% or lower against 15% and more for the average card. Sign the dotted line, and your unpaid balance is transferred to the new card at a far lower rate. Let’s say you shift a $1,500 balance on a credit card carrying a 19.8% interest rate to a card offering a 5.9% rate for the first year. Your savings over that year will come to over $200.
Just don’t abandon your present card for something that looks good on the surface but cost you more in the long run. Before you sign, make the card issuer answer these questions.
QUESTIONS AND HOW TO INTEPRET THE ANSWER
•Is there an annual fee for this card?
Some issuers offer a very tempting interest rate but hit you with a high annual fee. If the issuer won’t waive the annual fee, look elsewhere
•How long does the new rate last?
Look for at least six months, a year is better. That give you time to pay down your balance at the new rate
•How high does the rate go when the trial period ends?
You don’t want a card that when the trial ends that jumps to a higher rate that jump to a higher rate than you’re currently paying.
•You say I’m pre-approved for this card what does that mean?
The lender may re-screen you after you sign. Soft spots in your credit history could bump you to a higher rate.
•How long is the grace period?
The ideal is no interest until the charge has been on your account for 25 days. Some cards start charging interest the day you make the purchase.
•What’s the charge for late payments?
Some cards wait a few days after the due date before charging the late payment penalty. Be wary of cards that charge the penalty the first day you’re late.
•Will a late payment affect the low, introductory interest rate?
Some cards issuers bump you to a higher penalty rate even during the introductory period if you’re late in paying
•What rewards does the card offer and how do I earn them?
The card may offer a cash rebate or frequent-flyer miles. Make sure the rewards are sufficient to offset whatever fees and interest charges you’ll pay
Word To The Wise
If you carry too many cards, you risk running up big balances on all of them. When you are buying a home or a car, lenders will see all those cards as a red flag. Your loan could be turned down.
ACTION PLAN
Save money with a lower interest rate credit card, but ask all the right questions before you do. Before you switch, give your current card issuer a chance to beat the new deal.
Visit our Credit Repair Page and learn why the do-it-yourself approach may be the best way to go. www.jtsfs.com
Josette Pajotte is a Self Employment expert and small business consultants also a real estate investor. She shares tips, techniques and strategies with self-employed people to boost clarity and focus. Create sustainable motivation, and increase sales and profits. Visit her website at www.lfbusinessconsultants.com
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