Avoid introductory offers with high penalties later
One way to save money on your debt repayment is to avoid introductory offers that come with high penalties, interest rates, and poor terms later. Some introductory offers seem too good to be true, and they should be avoided because they are. Basically, if you choose to get a credit card because of a low introductory offer, you are asking for trouble.
If you get a card with no interest for six months, you may spend and spend on it because you do not have to pay anything to borrow the money, for a while. So, these high introductory offers generally are designed to encourage you to spend more, and thus end up further in debt, and paying more and more. When the introductory offer expires it is generally followed by a high cost interest rate.
|
|
The following is a look at what you can do to save money when it comes to using credit cards with low introductory offers:
First and foremost, you have to understand what the offer really is, how long it will last, and what happens when it is over. Introductory offers on credit cards usually give you a very low interest rate (or sometimes no interest rate) for a specified period of time. Rates jump at the end of the introductory offer. In addition to the interest rate jumping, often times there will be things like high late penalties, or back interest owed if you do not pay off what you incurred in the first six months. So, you have to know what the introductory offer is, and what the offer will be at the end of the introductory offer. In the excitement of gaining an unbelievable rate, many people fail to find out what the interest rate will be when the introductory period is over.
In some cases the introductory rate will last a month or two, in other cases it can last six months to a year. Some credit card companies will even waive the fees during the introductory period. So, it sounds like a great idea. However, if you are trying to save money on the cost of your debt repayment, you have to understand what the introductory does for you, and most importantly, what happens when it ends.
Basically, you over spend, and you get stuck with a high interest that you would not have had if you had not accepted an introductory offer. So, only use a credit card with a low introductory offer under the following conditions.
- If you are sure that you can pay the debt off before the introductory period expires.
- If the interest rate or fees are not higher than another card after the end of the introductory period.
- If you can always make your payments on time.
A low fixed interest rate is a better option than choose a card that has a great introductory offer. So, how does this save you money? It means that you know what to expect, and can save money in the long run to help you pay down your debts, and save money.
