 |
|
|
|
Information on mortgages, home equity loans, and consumer credit to help you use the power of financing to your advantage.
|
|
|
|
|
Untitled Page
|
|
|
Untitled Page
|
|
|
|
Credit Cards > Lowest Interest
Credit card teasers
REBECCA CARROLL, AP Business Writer. Associated Press.
Copyright Associated Press
Q. I'm considering transferring my credit card debt to a new card with a low introductory rate. Is this a good idea?
A. It can be, but there are a few things you should keep in mind.
Obviously, the introductory interest rate, or "teaser," won't last forever _ most run about six months. Consider how much debt you might still have when the rate pops up to its normal level, which might be higher than you expect.
If you still have debt at the end of the low-rate period, financial counselors advise against "teaser hopping" _ transferring your debt into another new credit card with a low introductory rate. A new credit card every few months could look fickle to lenders down the road.
"It's always better to have a history of staying with cards," said Steve Rhode, president and co-founder of Myvesta.org, a financial crisis center. "Future creditors want to see that you'll be a loyal customer and not just a one-night stand."
A history of loyalty could be especially important in future borrowing environments, Rhode warned. "As the economy worsens, credit card companies are going to get slammed with people defaulting, and lending practices are going to tighten up."
Rhode suggested asking your current credit card company to match offers you've seen advertised. Many companies will grant a somewhat lower temporary rate just for the asking.
People with a less than perfect credit history run the risk of possibly not qualifying for the offers mailed to them. Because inquiries and credit denials show up on credit reports, some borrowers might want to avoid applying for a new card they won't get.
But if the teaser offer still seems attractive, make sure to figure transfer fees in your calculations. Many of these deals charge several percent on the money you move into the account. If you transfer $1,000 with a 4 percent fee, you're paying a hefty $40 up front.
Tantalizing teaser rates might make the transfer fee worth it, but not if you're late with a payment. Most teaser rates spike higher if your payment is even a minute late _ some companies set not just the date that a payment is due, but also the hour _ and some move to a much higher penalty rate.
For example, one card offers a 1.9-percent teaser that shoots above 25 percent if you pay late or exceed the credit limit once. That's in addition to penalty fees, which are often close to $30.
There are other possible catches: Your minimum payment during the teaser period will likely be lower than a normal minimum. If you pay only the minimum, you'll still have a big balance when the rate expires.
Rhode suggested dividing your debt by the months in the teaser and working out a schedule to pay off as much as you can before the rate shoots up. Always, but especially during teaser time, your payments should exceed the minimum by as much as possible.
End adv for use anytime
Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission.
People: Rhode, Steve
Dateline: Undated
Text Word Count 501
The tips on this website should be considered food for thought only. Lendingtips.com is a clearinghouse of ideas, not a professional adviser. Before any important decision, please consult the appropriate professionals (lawyer, accountant, real estate agency, broker etc.).
|
|
 |
• Credit Cards > Lowest Interest Credit Card Articles Archive
• Credit card payoff Use this calculator to see what it will take to payoff your credit card balance, and what you can change to meet your repayment goals.
|
|
|
|
| ©2005 Lendingtips.com All rights reserved. |
|
|
Lendingtips.com 464 Oak Avenue Naples, FL 34108
Phone (239)877-7835 Fax (239)594-5686
|
|
|
|
|
