Using Low Interest Credit Cards Wisely and Avoiding the Credit Card Trap

It is one thing to find a good low interest credit card and it is another thing to use it wisely. Obtaining credit cards that have low introductory rates and using them to transfer the balances of higher rate credit cards you have is a great way for you to save on your monthly bills and you overall debt. But if you are not careful the plan can backfire in the blink of an eye.

The problem is that people with good credit are bombarded with credit card offers in the mail. Now it may be tempting to accept all of them and go on a free for all shopping spree this holiday season, but if you do that I promise you your joy will be very short lived.

When I was a stock broker I had numerous clients ask me to review their financial situations and see where any improvements could be made. Nine times out of ten I found that they had an enormous amount of credit card debt. When I asked them to explain many would tell me how a good number of the cards where obtained with an low introductory rate such as zero percent and they used it for a balance transfer. But then they went right out and re-maxed the card they had just transferred the balance from. The end result is two credit cards with maxed limits and guesses what; that zero percent introductory rate fades very quickly. This is exactly what the credit card companies want you to do and this is known as the credit card trap.

The good news is that you can turn the tables on the credit card companies with a little discipline and utilizing the following techniques:

• Cut Cards: Temptation sometimes gets the best of everybody. With credit cards, it is having those little plastic spenders in your wallet or purse that can do damage to your debt situation. Instead of dealing with the temptation, eliminate it by cutting up your credit card. The only reason you should be obtaining a low interest rate credit card is to transfer a balance so that is all you should do with it. It is also a good idea to cut the card that you just transferred the balance from. If you close the account you may risk some slight damage to your credit score, but if you cut the card up it is out of sight and out of mind and the account stays in good standing with a zero balance to show for it.

• Lower Limits: If you are not going to cut your cards up then at least call the credit card companies and ask for a lower spending limit for the card or cards that you will be transferring the balances. This way if temptation does get the best of you the damage can be limited.

The bottom line is it all comes down to how badly you want to get out of debt. Use self control and a good pair of scissors and you too can take advantage of the low interest rate credit cards the right way and avoid stepping into the dreaded credit card trap.