By Admin, Sunday, July 22nd, 2012
We know that it’s good to consolidate credit card debt (at least that is what we keep hearing from everyone).
If you are going to consolidate to other credit cards, then you need to be aware of some simple strategies that will maximise your debt repayment objectives.
What decisions should you take? Should you just go with that attractive ad in the newspaper that says ‘…the lowest Credit Card Interest Rate in the town is available here’?
The first thing, really, is to keep your eyes and ears open. There are always a number of offers available for you to choose from. The credit card suppliers keep coming with new and more attractive offers asking you to consolidate credit card debt with them.
However, you must note that the ‘Annual Interest Rate’ (APR) quoted in bold, e.g. 0% APR, is applicable only for a short term (3-9 months). The long term (or the standard) APR is different. So, when you go looking for a credit card to consolidate credit card debt, you must searching for 3 things (in terms of APR) – introductory APR, introductory APR period and the standard APR. So, how is each important?
Introductory APR is probably the most attractive thing to look for when you are looking to consolidate credit card debt.
If you consolidate your card debt to another card that has a low introductory APR e.g. 0%, the first thing you get is a breather/relief in terms of the rate at which your credit card debt has been growing.
Based on how long that 0% APR period is (generally you will look to consolidate credit card debt with a credit card supplier who offers 0% initial APR), you will at least be able to temporarily break the growth rate of your credit card debt. The longer the introductory period, naturally the better it is.
However, you should not ignore the standard APR. This is the interest rate that will be applied to your balance after the expiry of the introductory low APR period.
If the standard APR is too high and you know that you will not be able to clear off the entire credit card debt during the low APR period, that credit card is probably not the best choice.
On the other hand, if you think that you will be able to clear off the entire credit card debt during that period, you can make some compromises on the ‘standard’ APR of the credit card.
The right choice is the card that synchronises with your current and future financial position and needs…and ultimately helps you pay off that debt in the most efficient way!
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