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Credit cards are not the salvation of mankind, nor are they a destructive force in themselves. They are simply a tool and like other tools can be either used to assist people in their daily lives or misused and result in a lot of anxiety. Credit cards are not the salvation of mankind, nor are they a destructive force in themselves. They are simply a tool and like other tools can be either used to assist people in their daily lives or misused and result in a lot of anxiety. Credit cards can be used as a tool of convenience, such as shopping online or cashless purchases. Conversely, they can be abused and turn into a financial millstone around the owner's neck, resulting in large amounts of interest that has to be paid each month. Quite often, those who find themselves with a debt that is spiralling out of control view the idea of debt consolidation as the solution. These people are often inundated with offers that promise a reduction in credit card debt through consolidation of all debts into one card. But beware - these offers are not always what they seem. The "low" interest rates that are claimed usually only apply to those with extremely good credit ratings, not the typical "struggler" with a burden of debt. Some can, however, provide a solution to the problem in the long term. You will only know if you qualify if you apply. If you are accepted, check the fine print carefully and consider the following things: It is very unusual for a credit card offer to lower the outstanding principal in real terms. You will still have the same amount of debt and over the long term you will often be paying more. Whilst a low APR credit card is a bonus, it doesn't necessarily reduce the total amount owing. Consider this scenario: paying 8% on $10,000 over five years will actually cost you more than 10% on $10,000 over two years. This is because of compound interest. In the first example, the total amount of interest is $2165.60, whereas in the second example, you are only paying $1074.80. This is because the interest rate is per annum (one year) - not for the entire term of the loan. The attractive part of choosing the "lower" interest rate is the amount you have to pay each month. For the 8% interest over five years, you are paying $202.76, whereas with 10% over two years, the amount is $461.45 per month. Most people will find the lower payment easier to manage. Whatever your situation, it is advisable to weigh up the possibilities - there are online calculators that will help you to find a comfortable rate of payment. About the Author: Ready to roll back the confusion high APR credit card points. You're only a click away - http://www.debtjerk.com/low-apr-credit-card.html. |
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