Credit card debt is a fact of life for many of us. This article isn’t about stating the obvious — avoid credit card debt, stay within your budget, don’t be late. It’s about how to make a bad situation better.
Regardless of the reasons you’re stuck with credit card debt, there are things you can do to ease the pain. In fact, we’ve found a few ways for you to turn the tables on the banks and have them pay you to borrow their money instead of the reverse! Seriously — keep reading to find out how.
Balance Transfers: Go Surfing
This is one of the most cost-effective ways to reduce the interest on your existing credit card debt. All you have to do is transfer your high interest balances from your existing credit cards to a new credit card with a low interest balance transfer offer. There are several balance transfer promotions in the marketplace that offer 0% interest rates for 12 months or more.
The banks are so hungry for new customers that they’ll lend you their money for free for a year or more in the hopes you’ll stay a customer with them over the longterm. But in this case, loyalty doesn’t pay.
Thousands of people surf from one 0% balance transfer offer to the next, never paying any interest on their credit card debt. This is true in the U.S., U.K., and even for balance transfer offers in Canada. Just make sure to never make a late payment and watch out for hefty balance transfer fees.
0% Purchase Rates: Pump & Dump
If you’re about to make a purchase that you know you’re not going to be able to pay off right away, get a new credit card with a 0% interest rate on new purchases.
Again, banks are more than happy to offer you 0% rates for 12 months or more on new purchases. But remember: they only do so because more people screw up than not. Know the rules, stick to them, and you’ll have those fools funding your 0% rates. Break the rules and you’ll be the fool.
We have one Golden Rule to stay out of trouble: use automatic pre-authorized payments to pay down your debt. Find out your minimum monthly payment and the due date. Set your pre-authorized payments to meet or exceed the minimum payment and you’ll never have to think about your loan again. All your payments will be automated, taking away the risk of a late payment, and losing your 0% rate, out of the equation.
Let’s say you already have credit card debt and you can’t get approved for a balance transfer. Not all is lost. Believe it or not, banks are just as scared about you defaulting as you are.
Call your bank and ask them to lower your credit card interest rates. Not every request is granted, but there is absolutely zero downside to asking. The worst that can happen is that they say no. Big deal.
That said, there is a technique that will increase the likelihood that the bank says yes. First, ask the bank if they can lower your rates. See what they offer. Then, let them know you’ve received several 0% offers from competing banks Y and Z. Tell them you’ve been a customer of theirs for a long time and would prefer not to go through the hassle of applying for a new card if they can match the offer. If that doesn’t work with the first customer service representative, politely ask to speak with their supervisor — supervisors often have more authority to offer lower rates.
Just because you’re stuck paying high interest rates on your credit card debt doesn’t mean you have to do so forever. Put a little effort in and you may have the banks competing to offer you 0% for the privilege of servicing your debt. When the rules don’t work for you, sometimes it’s best to change the rules or start a new game. Here’s your chance to have the banks lend you money on their dime!
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