Hello, I have 16000$ in credit card bills. I transfer 75% of it to other credit cards with lower interest rates and will save my self a few hundred dollars for like a year. Is there a downfall to this credit wise???
My old interest rate was 24% and my new rat is 3%
2. I transfer balance from all my bills in to 6 low rate credit cards. Is this a bad thing? Will i be paying more in the long run? Any suggestions?
Thanks!
2007-10-18 01:41:31 · 5 answers · asked by EL Nene Catracho 1 in Business & Finance ➔ Credit
Well, transferring debt around does not solve the problem. Instead, you should be trying to pay it OFF. You are not in debt because you have a high interest rate, you are in debt because you spend more than you earn.
You should also look at that transfer contract. What happens after a year?
Call all of them and work out a payment plan and try to get your interest lowered or stopped.
Then, make the minimum payments on every one of them. On the lowest dollar value, put all your extra effort toward paying it off. Once it is paid off, then roll that extra money to the next largest balance. Continue this snowball until all your debts are paid off.
You probably need to cut your expenses back to the bare minimum. Get rid of cable, cell phones, internet, etc. Lower your electric bill, gas bill, water bill, etc. Don't eat at a restaurant until your debts are under control. Take a sandwich for lunch. Cancel the gym membership.
Try to increase your income by getting a second job. If you have a car with payments, get rid of it, and buy a good dependable used car for CASH.
Go to the library and get "The Total Money Makeover". Read it and follow it carefully.
Go check out Dave's website as well.
www.daveramsey.com
2007-10-18 01:45:29 · answer #1 · answered by Anonymous · 1⤊ 0⤋
One big downfall is that if you pay late on the transferred balance or any other credit card, they may be able to raise your rate. I found this out the hard way...right back up to the 24% rate. Some rates go over 30% these days. If you proceed with this plan, or even if you don't, you MUST make your payments on time. Between rate increases and the $39 late fees, you can't catch up.
2007-10-18 10:24:20 · answer #2 · answered by Debdeb 7 · 0⤊ 0⤋
The downfall is that you are using credit cards. Usually, the credit card company charges you money for the transfer. More then likely it is only a teaser rate and in 3 months to a year the rate will go up. Also, if you are only paying the minimum balance or close to it, then it will take years (or decades for a large amount) to pay it off. What you should do is control your spending. Another option is to get an unsecured loan to pay off all of your credit cards. There is a company where you can borrow money from that is easy to apply and a small fee to pay off all of your cards. The loans they offer are three year loans. Email me at rice.j@hotmail.com for more info.
2007-10-18 09:07:52 · answer #3 · answered by John 3 · 0⤊ 0⤋
It depends whether you are planning to pay it off or not.
Anyway credit cards have charges, you may want to know more about. The credit card companies are not stupid what they lost in interest charge they will recoup in other charge.
I recommend for you to consolidate your debt and work to pay it off with a fixed periodic payments. And stop using credit cards except for paying bills over the phone.
2007-10-18 08:58:23 · answer #4 · answered by rhb76 2 · 0⤊ 0⤋
Leeroy,
Rick B convered the problem throughly.
one item u need to be very aware of is the
'universal default' section in the very very very fine print section of ur "low" rate cards .
this section allows the card companys to RAISE ur percentages at their choice and for their reasons without notice. can u say 36%?
great place to go when in debt - daveramsey.com and to 2 more jobs.
p.s. the old account with zero balances close them!!!
2007-10-18 08:57:14 · answer #5 · answered by Anonymous · 0⤊ 0⤋