How To Consolidate Credit Card Balances
Published by admin on August 1, 2010
How To Consolidate Credit Card Balances
Odds are if you’re in credit card debt, there’s probably more than one card
involved. In fact, you may have several credit cards with balances on them.
What’s the best way to consolidate them? Well here’s a Q&A with Michael
Davis of CreditCardForum.com to give you the answer:
*Q: What’s the first step of consolidating credit card balances?*
*A:* To get started, I want you to get out a piece of paper. For each credit
card write down its current balance and interest rate. After you have that
done, I want you to arrange them in a new list – from the highest APR to the
lowest. This will prioritize the debt; you will want to tackle the highest
interest rate balances first.
*Q: How do you propose tackling those high interest balances?*
*A:* Well, you have a couple of options. If one of your cards already has a
great interest rate and a high amount of credit available, you can transfer
balances from your higher rate cards to that one. The second option, which I
recommend, is using 0% balance transfer credit cards. Now keep in mind you
will pay a balance transfer fee of anywhere from 3% to 5%, but even when you
take that into account, you will be saving a lot of money.
*Q: What are the best credit cards for balance transfers?*
*A:* In a nutshell, you want the longest offers available. The best offers
can vary depending on the economy, but as a general rule of thumb I always
recommend going with an offer that is at least 12 months. Sometimes, there
are even offers available for 15 to 18 months, but those are much less
common these days. On Credit Card Forum, we do maintain a current list of
the best credit cards for balance transfers.
For example, right now the Discover More card is currently the longest offer at 15 months. However I always tell people to shop around. For example, find the best offer on that list and then call up your current credit card companies and see if any of them will match it. Usually they won’t, but sometimes they will.
*Q:** Let’s say someone uses a balance transfer offer, but their credit line
isn’t big enough to consolidate all their credit card balances. What should
they do?*
*A:* Unfortunately, credit card companies have really been tightening the
belt on credit lines these days, so many people find themselves in this
predicament. When that’s the case, you will need to split the balance up
between your lowest rate cards. This might involve using multiple 0% balance transfer credit card offers, transferring to your lowest rate cards, or a combination of both.
*Q: Do you have any other tips on how to consolidate credit card balances?*
*A: *Absolutely. One thing to keep in mind is that it’s never a good idea to
exceed 30% of your credit limit on a given card. Why? Because too much of
your limit can negatively impact your FICO score. So if your limit is
$10,000 on a card, I wouldn’t recommend having a balance of more than $3,000
on it. Another thing to keep in mind is that most banks won’t let you use
balance transfers internally (i.e. you can’t use a Citi 0% offer to transfer
a balance from another Citi card). For this reason, when you’re looking for
s credit card for balance transfers, keep in mind it will probably have to
be a different bank.
Loading ...
