Shiny new credit card offers can be pretty exciting. After all, it’s been a tough couple of years, and a new card can mean new adventures. Travel, new clothes, and new electronics are all very tempting when that offer comes in the mail.
Watch Your Calendar
You can use your new credit card to:
- Consolidate old credit card debt
- Purchase larger ticket items and pay them off over time
- Build up points and miles
You must track when that interest will come due and plan accordingly. For example, you get a great card offer with 0% interest for 24 months and a $12,000 credit limit.
Grab a Calculator
If you have three cards with $10,000 in total debt and interest owed, you can roll this debt onto your new card. According to the experts at SoFi, you now have a limited time to pay off this debt before more interest is charged. Be aware that putting $10,000 of debt on a card with a limit of $12,000 will hit your credit utilization hard; even after paying off these cards, your credit rating may dip for a time.
As a general rule, there is no extending these 24 months. So when is interest charged on a credit card? As soon as the lender can charge it, that’s how they make their money, after all.
Call and Negotiate
You may be able to get a lower rate with a call to your card company. However, be aware that they don’t have to work with you and may not be willing to negotiate if you are late with your payments.
However, if you call and make your balance transfer to another card, go ahead and ask them if they offer balance transfers. If they don’t, and you don’t need to boost your score immediately, call back when the balance is zeroed out and cancel the card. Don’t work with lenders who won’t offer you flexibility.
Avoid Consolidating Your Debt
Credit cards are unsecured debt. If you refinance secured debt, such as your house or car, with unsecured debt, you risk losing something tangible over credit card debt. Avoid this; you may be better off walking away from credit card debt and keeping up on your mortgage. Consider setting up an account at a credit union for additional help negotiating debt you can’t overcome.
Finally, do whatever it takes to get your household on a budget. A budget is not money in jail; it’s a tool that can make it easier for you to manage your current debts while you save for your future. Use your budget as a way to build awareness. What parts of the month are the most expensive? Which time of year is a great time to save? With a budget structure in place, you can learn the nuances of your money situation.