Crash course to avoid credit card debts – Change your card using habits – part 2

I hope you have gone through my last post about credit card habits to avoid debts and liked it also. Today I am continuing the rest of the article…enjoy πŸ™‚ and let me know your feedback.

5. Transfer after consideration – You can transfer your balance if you have a low interest credit card. But you must also consider the ratio between the credit limit of your card and the transferred balance. You may hurt your credit score if you consider using all your available credit balances on the new account. Apart from that you will also be charged 3 to 4 percent fee as transfer charges.

But you must think twice…is it worth to harm your score just for getting the lower rate? Perhaps not. You can only try it if you have a decent credit score of 700 or higher. In this situation, you may utilize less than half of the credit limit towards the new card. The rate of interest will be much lower than current rate after the introductory period.

Before you initiate the transfer, contact your current company and instruct them to lower your rate. Ask them to cooperate as you are considering the balance transfer option. The company would do it if you have a good credit score and regular payment history. however, you may need to call back the supervisors and if they still hesitates, you need to research your ways to transfer balances in other accounts.

6. Stop unnecessary credit application – If you avail 2 or 3 credit cards and regularly pay them, you will see a significant growth in your credit history. It is the goodwill you are making through those credit cards and you are considered as a prime account holder. But there is a situation that if you acquire more cards, it may reduce your score. It is because, normally, a person might require more or less 2 or 3 credit cards to serve his all financial purpose. And if you are gathering more credit cards, you may have the tendency to accumulate credit more than you can afford. This behavior will affect on your credit score and gradually it became lower than you have expected.

So, deny any more offers when a credit card company gives you 20% off on your purchase in a new card. Don’t fill up any store credit card application forms just to see if you can qualify. Use your current cards rather than high interest store credit cards. These unless cards comes with expensive offers which will only put a load on your finances. It will not only lower your credit score but also generate new debt balances, for an example – offers like getting $800 off on a $5,000 freezer if you buy this through that shop credit card.

7. Open your accounts – You may think that closing all but one credit card accounts will solve your credit problems. But actually…it won’t. Because the damage is already done when you have opened the accounts in a first place. So, if you again initiate the closing of those accounts, it may actually drag your precious credit score down..even deeper. How ‘s that possible? Because when you close the available credit accounts, you will shorten the gap between your available credits and the amount you owe. So, if any way the total available credit goes down, your credit score will go down too.

So keep an eye on your cards. If anyone, whether he is a co-owner or any other authority, you must monitor the uses of your cards. Check regularly the frequency of the monthly statements and verify if there is any amendments in the specific terms and conditions of each card.