Tuesday, May 5, 2009

Did I Make A Mistake?

A month ago I took a good hard look at my credit cards. (Okay, it was actually the bills since I cut up the cards almost a year ago.) I realized that due to a couple of stupid mistakes over the holidays, I've been spending close to $300 a month on interest alone. Fed up I went into my credit union and inquired about options for a consolidation loan. The customer service person told me they don't do consolidation loans, but I could either apply for a new credit card at a low introductory rate of 3.99% or I could apply for an increase in my line of credit at 14%.

Honestly, I didn't think I would get approved because my debt to income ratio is high, but I thought "What the heck?" Its not going to be any worse than paying 26% on the credit card I have now and its cut up so I won't be tempted to use it. Amazingly enough, I was accepted for an amount that was almost enough to cover it.

When I got the card, I was still a bit unsure if I was making the right choice. After all, I've transferred balances before and I'm still struggling with debt. After much debate and a month later, I made the call. Sure enough, it couldn't be that easy. The woman I spoke with today said the interest would be 11%. I asked her about the introductory rate and she said it ended March 15th. Funny, that was about 5 days after I received it. I decided to do it anyway. After all, that is 15% less than what I am currently paying.

So, have I learned from my past? I hope so. To help guarantee my success I've arranged for automatic payments from my account to make sure I don't miss a pay date. I'm closing the other account as soon as its paid off.

1 comment:

Poddys said...

OUCH! It hurts when you get charged interest on your credit cards...

I am fortunate enough that I can (so far) manage to pay mine off every month, even though this is my 3rd month of being unemployed. I am very frugal in my spending, but use my cards to help save me money.

I use cards that give me rebates, usually 1.5% on everything, and then other bonuses every so often on other items. Then I get $50 or $100 back every few months which is nice.

I pay the cards online, setting up the payment ahead of time so I don't forget, and timing it for a few days before it's due to make sure it gets there.

So I save money by taking advantage of rebates, and it costs me nothing to pay it off.

I also get protection for things that I buy, and don't have to carry loads of cash around with me.