Debt Problems

Balance Transfers

Transferring the balances of your high interest cards to lower interest rate credit cards may seem like an effective way, but this easy way out may be a good idea gone wrong. Transferring a balance onto a credit card with a low interest rate can potentially save you money on interest if you STOP from charging on it and focus on paying off the balance before that introductory rate expires most of these rates are for a limited time and then go up to a much higher rate.

But then again most people continue to charge on the new credit card and then dig themselves into a financial hole with more debt once the lower interest rate is over. One thing to look into is that new purchases may pull an altogether different interest rate than the introductory rate. So, please read all the instructions and notes very carefully.

Charging or Cash

I've seen that some people prefer to use credit card even when they had the money to pay with cash or debit. Purchases of $20 or $30 made several times a week over and over can add up quickly. The balances that you can't pay off each month mean paying interest charges and, subsequently, more money for items you could have bought outright and interest free.

Check Your Credit Report

Check your credit report at least once if not twice a year and make sure it has no errors on it. Taking off these errors can be crucial for getting better interest rates and even stopping identity thief from ruining your credit rating. Your credit report also affects your credit score, which determines how high your interest rates will be on future loans that you may need, like a mortgage or car loan.

The Fair Credit Reporting Act allows for the correction or deletion of inaccurate, outdated or unverifiable information, provided that a re-investigation into the disputed data sides in your favor.

Unfortunately, negative but truthful data must stay put. A Chapter 7 bankruptcy filing, for instance, will remain on your credit report for 10 years, a Chapter 13 for seven years.