(This is a guest post by Greg Mischio via mortgageloan.com. Greg has been writing financial articles for over 15 years. Based just outside of Madison, WI, he has written for several online financial news sources, including the CUNA Mutual Group, Parson Consulting, and MortgageLoan.com.)
Looking for surefire ways to eliminate some credit card expenses? Here are 10 tips that will prevent cash from jumping out of your pocket and into your balance.
- You better shop around. It sounds simple enough, but for some reason, people go with the first company that grants them a credit card. Be patient, shop around, and find out who’s offering the lowest rate.
- Use a balance transfer. If you’ve currently got a balance with a card that charges a high interest rate, consider transferring the money to another card. Many companies will give you an extremely low rate on your transferred balance.
- Eliminate the annual fee. It used to be that annual fees provided the lion’s share of a credit company’s profits. Now that the market has grown so competitive, many companies no longer charge an annual fee for the card. Seek them out.
- Cleverly handle multiple balances. If you carry multiple cards, pay off the balance of the card that charges the highest interest rate. Then, cut up the cards that charge the most.
- Divide by two. Instead of carrying multiple cards, carry only two. Use one to take advantage of rewards programs offered by the credit card companies. The second can be used for emergency situations.
- Don’t carry a balance. Credit cards aren’t the cheapest lending tool on the market. Interest rates are almost always higher than that of a home equity loan. As a result, avoid carrying a balance on your card. If you find you’re unable to pay off the balance at the end of every month, reduce your spending, increase your income, or better yet, do both.
- Ask and ye shall receive a better rate. Don’t underestimate how important you are to a credit card company. Make them an offer: Tell them that if they can’t give you a better interest rate, you’ll be forced to take your business elsewhere. You’ll be surprised at how many companies will provide you with a lower rate.
- Avoid the cash advance. Every time you receive one of those cash advance checks from the credit card company, deposit them in the recycling bin. The rates charged for a cash advance are much higher than the rate you pay on your balance.
- Consolidate with a home equity loan. If you can’t make your monthly credit cards payments, perhaps you need to wipe the slate clean. Take out a home equity loan to consolidate your debts, and then reestablish a spending budget commensurate with your income.
- Make your payments on time. There’s nothing more damaging to your credit score than making a late payment. If you’re late, your credit score will feel the impact, and your buying power will be limited down the road.
By following these tips, you’ll be able to keep more of your cash in your pocket. And that should reduce your dependency on plastic.