Refinancing Credit Card Debt,can anyone tell me about it?
Hope you all can give me some advice. I have only one credit card with about
a 10K balance on it at about 17% interest. I have average credit (680 score
from myfico.com) and pay $600/month toward the debt which means I should
have it paid off in about 1.5 years or so. I have no other debt right now
and about a month's salary in savings.
I want to try and refinance this balance but I'm worried that I won't be
approved for another card with that high of a balance so as to allow me to
refinance the entire balance, which is what I would prefer and unfortunately
you don't really find out what balance you've been approved for until after
the fact. I worry that if I apply for a card, or several cards, to try and
get enough low interest credit to refinance the entire debt that I will
damage my credit report. Also, my understanding is that the balance transfer
options at the low rates are often a one shot deal, which doesn't allow me
to keep one low limit card to use to continually refinance the debt.
I'm not that well versed in all of this stuff so I'm hoping you all can shed
some light on something I maybe missing or some other techniques that I
could use to pay this debt off more quickly (besides the obvious: paying
more!)
Unless you are planning to buy a house in the next year, start
applying for a few more credit cards, with the intention of low rate
balance transfers. I have a bunch of cards and I regularly get offers
for 0% financing (subject to a 3% transaction fee). These are
typically for about 4 to 6 months and about the time one runs out,
another starts. (Be careful in flipping, a 3% transaction fee every 4
months is a 12% interest on outstanding balances.) Another option
might be American Express, which will often give a decent rate on a
balance transfer with that rate good for the life of the loan.
I would _NEVER_ have just one card. Doing so puts you at the mercy of
a single lender and doesn't give you any leverage at all. Credit
cards are a buyer's market. Get a few and if you don't like the way
one treats you !
As always, you have to have disipline and use cards wisely. If you
can't think of any other way, put your excess cards in ice cubes in
the freezer.
People are scared of credit cards and FICO scores, but if a lender
gets antsy, the time to dump the excess is during negotiations. Use
the system, don't be scared into unsound finances by a FICO score.
-See what it says in the fine print. There might be a cap on the transfer
fee. Some limit that 3% transfer fee to a maximum of $50.
Once you transfer the money to a 0% card, be careful not to charge
anything else on that card! Anything you buy will be charged at a
rate of 12% interest from the day you buy it until the day you pay
off the entire transferred balance. Any principal you pay will be
applied first to the 0% part of your transferred debt.