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Hi
Scott,
I am a recent college graduate, and I have accumulated about
$4,000.00 worth of debt spread out in 4 different credit card
accounts. I would like to transfer all of the balances to an account
with a lower APR to save money and to make monthly payments more convenient.
The
problem is that I have not been able to be approved for a credit
card with a limit of over $1500.00. Besides having multiple cards
near their credit limit, I have good credit and always make payments
on time. Is there anything that you can recommend?
Please
Help!
Mary
Mary,
Thanks for writing!
I know just how you feel. I had the
same situation when I was finished with college because I had to use
my credit cards to help finance my senior year.
Here's the deal. The most important
aspect of that debt is how much it's costing. At least that's my
opinion. The best loan is the cheapest loan, and I consider it worth
the work to write four separate checks if the rates are worthwhile.
However, if you can consolidate at a lower rate, you absolutely
should.
Many people make the mistake of
consolidating simply because they don't like the work involved with
handling many accounts. The mistake is that they consolidate at a
greater rate for the convenience of having one payment. It's a
personal choice to decide if it's worth a little extra in interest
charges to avoid dealing with four accounts. It's not worth the
extra cost for me.
If you do consolidate your accounts
into one, then please do not close your zero balance accounts! If you
close your accounts, you close your credit options. You may need
those other cards sometime in the future to make the current banks
compete for your business. You always want to have credit options,
and the best options, in my experience, emanate from banks that you
have had a long relationship with.
Now let's talk about consolidating and
saving money!
You mentioned having trouble getting
new lines of credit to consolidate that $4,000 but there's another
strategy you should attempt. Call each of your existing accounts and
ask for their balance transfer department. Tell the rep, "I
have about $3,000 of debt on other cards. If you (1) raise my credit
limit, and (2) give me a great rate, I'll do the transfer right now.
Otherwise, I have three other banks to call!"
They may increase your credit limit
on the spot by a few hundred dollars; they may do as you ask; they
may need to get back to you; they may say no. No matter what happens,
call each bank, and see what they can do. If they do give you a good
offer, then transfer your balance.
If they deny your credit line
increase, then be sure to get a free copy of your credit report from
the credit-reporting agency that the bank used to reject your
line-increase request.
Good luck, and please let me know what
happens!
Regards,
Scott
PS: And you can take that to the
bank! J
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