The novelty of many Christmas gifts has eroded. The champagne bottles from New Year's Eve celebrations are being placed in recycling bins. The much-anticipated new millennium is finally here. The new year brings much promise, but not everyone is optimistic about the prospects for the new year - particularly those that soon will be getting their credit card bills in the mail! While the staff at CardRatings.com would like to think that every cardholder strictly adhered to our Dec. '99 card tips, we know that exercising "card discipline" during the holiday season is "easier said than done." For this reason, we have included the following tips that will hopefully be of benefit to those that find they are suffering from a case of "January credit card blues." :)
* If at all possible, avoid the temptation of making minimum payments on your credit cards during the first months of the new year. While alluring, making minimum payments can be very costly - especially in the long run. According to Consumer Credit Counseling Services, paying the $60 minimum payment on a $3,000 credit card balance would take eight years to pay off and would translate into $2,780 in interest! By paying only $50 more a month, however, the debt would be paid off in three years and result in a savings of $1,800 in interest charges!
* Consider applying for a lower rate credit card. If your card's annual percentage rate is over 10%, then you should definitely consider applying for a lower rate credit card. Our credit cards section contains a list of credit cards with the lowest rates in the country. Transferring your credit card balances to a lower rate card could easily save you hundreds of dollars in a relatively short time period.
Please note that you generally must have a good credit score to qualify for low rate credit cards.
* If you have acquired a particularly bad case of "January credit card blues", consider a more aggressive remedy. Nonprofit debt management programs can be very helpful, like Consolidated Credit Counseling Services, Inc. (featured offer). Consolidated Credit Counseling, a nationally recognized non-profit organization, offers a free debt analysis that only takes a few minutes to complete. Such programs negotiate with credit card companies and often can lower credit card interest rates by 50% or more! Furthermore, participation in such programs helps safeguard against bankruptcy.
* Another aggressive remedy for homeowners involves home equity loans. Home equity loans typically offer interest rates that are significantly lower than credit cards and are an excellent way to consolidate credit card debt according to Selby Kennedy, a consumer credit advisor that is featured regularly on KTHV (CBS affiliate). Home equity loans also offer potential tax advantages.
* Try negotiating directly with your credit card company. Many credit card companies are willing to give cardholders options regarding interest rates, fees, etc. When negotiating with a card company, take a firm, but friendly approach. Threatening to transfer your balance to another credit card usually makes most card companies "willing to listen."
About the Author
Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about credit cards since 1998. New! Curtis is the author of "How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line" (FT Press, 2008). He is also the co-author of the upcoming Complete Idiot's Guide to Person-to-Person Lending (Alpha Books/Pengiun Group USA, April 2009), a contribitor to The Ultimate Allowance (InnerWealth Publishing, 2008) and is extensively featured in 42 RulesTM for Driving Success With Books (Super Star Press, January 2009).