Credit Card Misconceptions

Swapping your high-interest credit card for one with a low introductory interest rate isn't as advantageous as you might think.

Take a minute right now and see if you can find a low-interest credit card that allows you to transfer existing balances. Go ahead, search online, call your local bank or even take a trip to your mailbox.

Once you're finished, come back and continue reading this article so you know what you should do next.

Credit cards promising low interest rates that allow you to transfer your balances are in ample supply. If you actually tried to locate one after reading the second paragraph, your search probably lasted as long as it took to visit Google and type a phrase similar to "credit card transfer balance".

If you decided to search online, what you likely saw was a variety of sites promoting credit cards with a 0% balance transfer – an offer anyone with excessive debt has likely had trouble resisting.

Credit Card Consolidation without Debt Elimination

The problem with a credit card consolidation strategy involving balance transfers is that the low interest rate only lasts a few months. And, unless you can pay off your debt entirely during the introductory time period, it's likely you'll have to switch cards again. Unfortunately, too much of this type of activity will show up on your credit report.

Worse yet, you could end up having to use the high-interest credit card you were hoping to get rid of.

If you feel you must switch credit cards to consolidate your debt, take the advice of financial guru Suze Orman and don't close your unused credit cards. This practice will decrease your available credit limit, which can negatively affect your credit score. On the other hand, you should never open credit card accounts you don't need just so you have a higher credit limit.

Discover more tips for eliminating your debt by reading our 5-Step Debt Management Plan.

For a free consultation to learn how you can create your own debt consolidation program, contact us today!