Believe it or not, I know
people that have revolving credit-card debt in amounts of $6,000 or more with rates over
20% and they're not interested in getting a better rate. That's just crazy!
The first defense against being gouged for high rates and
fees is finding new creditors. During radio interviews, I'm frequently asked how many
credit cards I have. Don't be alarmed
I manage over 80 credit cards in my household,
most of which have no balances, however, keeping the accounts open gives me more options.
Now many of you may say, "Scott, why should I listen to
a guy who has so many credit cards. What would you know about getting out of debt?"
Who would you rather ask? Someone who's had no credit cards
since 1965, or me, who's always using credit-card deals, calling banks, and reading the
fine print in all the mail offers? Plus, I like to have options when I shop for a loan,
which is why I always have low rates and low-rate offers. All my credit-card banks are
fighting for my business. The only catch is that I must be responsible with my credit card
spending and usage-no problem, I just keep all the cards locked away
I'm not suggesting that you, or anyone, should have 80 credit
cards. You need to have discipline and good credit/debt management to handle that many
accounts. You can't buy what you cannot afford to repay. Almost all of my accounts have a
zero balance. I carry two credit cards in my wallet and the rest are in the
"credit-card graveyard." That's the file where I leave all these zero-balance
credit cards until I need to borrow money. At that time I exhume the cards and give each
bank a call.
Because I have so many credit accounts, I can also go
shopping for a loan. For example, I might call each credit card bank and say, "I'm
looking to transfer $3,000-what's your best deal? Make sure you tell me the best deals
right away because I have 79 other banks to call this morning." That's power! I like
them to beg for my business.
Another great benefit from having many cards are the
credit-options that come with responsible usage. I always have low-rate offers on nearly
half of all these accounts-all the time! That means I don't have to shop for too long to
find a great deal. Let's look at how much you can save when you take advantage of a
relatively common credit-card offer-2.99% for 6 months.
Many times you'll get a balance transfer offer and it will
show a table of savings in the letter. The table will compare how much you owe now, at
your current rate, with the transfer rate and then show you the dollar savings. Well, you
can't calculate the true dollar savings unless you also know the amount being paid per
With that in mind, here are the true numbers. Say you have
$5,000 right now, on a credit card, at the national average credit-card interest rate of
18% APR. Let's also say that you're making payments of $105.00 per month, which at that
rate will take 7 years to repay.
Suppose you get a new credit card and transfer that balance
to 2.99% APR for only six months, then the rate goes back to 18% APR. If that's all you
did to save money on this debt, then by the time the debt is paid off you'd have saved a
total of $1,107.00! That's right, all from that one-time 2.99%-for-six-months balance
transfer. Boy is that worth it!
Now, let's say that you get a credit deal with 2.99% APR for
six months and after that it's fixed at 9.99% until the balance is paid. The savings over
the life of the loan from taking advantage of this offer are $2,707.00. Amazing how much
money this single offer can save.
That's why switching from your current credit-card bank can
be good idea, and in this case, a $2,707.00 idea. But it's not over
will happen. The first bank, the one you transferred the balance from, will start sending
you very attractive low-rate offers. After a while those offers may get as low as 0% as
they beg, beg, beg, and beg some more for you to come back.
There was a time when my friends told me, "Scott, new
credit card banks are going to turn you down when they see that you have so many credit
cards!" Duh, if I have a ton of credit cards already then why would I need more?
Well, just to prove them wrong I applied for every credit card offer I received by mail.
I received one out of two that I applied for. That's
of all the applications that I sent in. I eventually had to stop applying because they
just kept on coming. Then some people said, "Well, Scott, the only reason you were
able to get so much credit is because you have a great credit history." Yes, it's
true that my credit history is good. That's why I wrote, Credit Card and Debt
because I want everyone to know how easy it is manage debts and receive great credit deals
that save thousands of dollars!
The bad news is that if you've made mistakes handling your
credit in the past, those mistakes cannot be removed from your credit report. Eventually,
depending on what the "mistake" is, it will be removed with time. The good news
is that if you start better credit management today, it won't be long before you begin
getting those good credit offers. Banks are always searching for new customers and even
after a bankruptcy, decent credit offers start to become available within three months of
improving credit management.
There is a list of banks on the right side of this article.
If you're looking for a new credit line then this is a good place to start applying. Make
sure you read all the fine print to determine if the offer is good for your situation. The
best part is that you can apply for these cards right now online.