December 3, 2008

A Helpful Tip (for those of you with high credit card debt)

While writing my last post about credit cards, I remembered something that I have been doing to help myself through shaky economic times which may also be of help to those of you who are struggling to make your monthly minimum credit card payments, (usually 2% of your total balance.)

If your total debt level is at the point where your required monthly minimum is $200 or more, and you have two or more credit cards, consider doing the following in lieu of missing a payment and defaulting:

Pay your monthly minimum balance due with a balance transfer from one of your other cards! Then when the minimum comes due on the other card(s), transfer the balance back! Net cost to you...Zero!

You will need to have some credit limit left on each card in order to do this, in other words you can't be totally "maxed out" on the cards, but if you have a limit of a few hundred dollars left on each one, it can be done. Plus, most cards allow balance transfers as low as $100 or $200 per transaction. You may get charged a small balance transfer fee, likely 3%, but on such a small transfer amount it's no big deal.

I have been doing this about every other month or so for the last two years, and I have yet to have a balance transfer request denied! It's a great way to increase your cash savings which is a good idea in deflationary times, especially if we head into a Depression, when Cash will be King.

In theory you could do this for a lifetime and never have to pay your credit card balance back at all, but don't take this thought seriously unless things get so bad that it really looks like the death of the USA is imminent. (Of course at that point you would owe it to yourself and your family to do whatever it takes to prevent you and them from being dragged down with it.)

Just some financial advice from your friendly neighborhood blogger, free of charge!

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