Great Grandmaster Tae Yun Kim teaches us that our thoughts create reality. This can also be true with financial “rules”. Like the Matrix, some rules can be bent, some can be broken– without breaking the law.
Every dollar paid in interest is a dollar down the drain. After all, interest is how banks make money. The only way to avoid interest is to get your balances down to where you can pay in full every month. Minimizing the interest you pay each month will help get your balance down with the same monthly payments. Here are tricks I have used to pay less interest on my credit cards. The loophole is that banks don’t talk to each other. They only look at your credit card with them and your FICO credit score.
1. Pay at least the minimum every month on every card. This eliminates late fees (another income source for banks) and boosts your credit score.
2. If you carry a balance on a credit card you use for everyday purchases like groceries & gas, you pay interest on every purchase in addition to the old balance– more money to the bank. Take your credit card with the highest interest rate that has a grace period on purchases, and do everything you can to pay it off. Pay the minimum on the other cards, even if their balances go up. After your most expensive card is paid in full, you can use it for everyday purchases, pay it in full every month, and stop paying interest on new purchases. IMPORTANT: If you need to make a large purchase you can’t pay 100% when due, then put it on a card that already has a balance so you can continue making new purchases interest free.
3. Once a credit card is paid off, you will usually start getting offers for low interest rate balance transfers on that card, even if you have a balance on other cards. That bank is no longer making money from you in interest! Stop making purchases on your empty card so it stays empty, pick your credit card with the next highest interest rate, and transfer the balance to your empty card. You are now paying less interest on the balance on existing balance of the other card by using a cheap cash advance!
4. Do everything you can to pay down your other credit cards. This will take discipline and patience, but every dollar paid in interest is a dollar you don’t have to spend on yourself. After you pay down your expensive debt, you will have more money each month because of all the interest you are no longer paying to banks. Look forward to that day, and taking advantage of loopholes in the financial Matrix will get you there faster.
5. In addition, after you pay down your credit cards, your FICO credit score will go up, and you can ask your credit cards to lower your interest rate and/or get new cards with lower interest rates. If you keep your credit card balances below 50%, you will have a good credit rating for car loans and other loans. The lower your balances, the higher your credit rating.
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