I do. I admit it.
In my zeal to lower my APR using balance transfer promotional interest rates, I open every credit card offer I get in the mail these days and go straight to those tongue twisty terms and conditions.
Sometimes this works and sometimes I get burned. Here are my key lessons learned:
WARNING NUMBER 1: Check the balance transfer fee.
Every time you open a new card and transfer a balance from an old card, you get charged a balance transfer fee from your new card company. You better make sure that the fee you pay for the transfer is justified by bouncing it against the finance charges you're paying with your current card. In most cases, it is justified...particularly if your new card has a 0% APR for more than say 6 months.
WARNING NUMBER 2: Get Organized!
If you're going to be wheeling and dealing and slicing and dicing your credit card debt among a bunch of different low rate cards, you better have a plan for keeping up with them. I went from one massive credit card, to 6 - yes 6- smaller ones. And guess what, if any one of those 6 falls through the cracks - BAM - you get hammered again with the higher rates plus late fees.
WARNING NUMBER 3: Do not bother activating.
I'm happy to hear alternative advice on this, particularly if this is a credit hit or security risk, but when my new plastic comes in, I don't even activate my card. Instead I staple it to the terms sheet and file it away with the rest of my "debt files."
If anyone else plays this dangerous game, I'd love to hear your war stories.
2 comments:
Years ago I bounced from a card or two to another one, but I never had more than one card open. We have been pretty good about just keeping one credit card. Well, major card that is. I do have a Kohls card. That is the first one I ever opened. I have had it for less than a year and have already found it too tempting to have. I have easily charged more than I could afford in one month.
Our problem is with our one major card, we keep racking it up and every year we pay it off with our tax refund. This year we vow to be different. To pay it off and then attack our other debts---student loan, 1 personal family loan, and 2 auto loans. Those are what kill us each month.
I have thought about switching to a low rate card now, but I figure our tax refund will be here fairly soon and it would not be worth the hassle.
But I agree.... people must read the fine print!
It's a tricky game, bouncing the cards...some of my rates were so high though, I felt like I really didn't have a choice. I'm hoping my debt snowball wipes them out soon!
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