Posts Tagged: ‘zero-interest balance transfers’

How a Balance Transfer Affects your Credit Score

March 1, 2017 Posted by kingcade

If you are struggling to pay down credit card debt, the interest is not making it any easier. Transferring the debt over to a 0% interest credit card can save you money in the long run. But applying for a new credit card, or any type of new credit requires a “hard inquiry” to determine if you qualify.

This can have a small, but short-term effect on your credit score.  The five biggest factors in determining your credit score include: credit utilization, payment history, types of credit, credit inquiries and the ages of your accounts.

Here is an explanation of how each of these can be affected when you do a balance transfer.

  1. Your Credit Utilization: Suppose you owe $10,000 on Card A, which has a limit of $12,000. You are using 83% of your available credit. But now you open Card B and move all $10,000 onto it (it has a credit limit of $10,000). You are now using a total combined available credit of 45% (a combined $22,000 on both cards). The new lower credit utilization will help boost your credit score.
  2. Payment History: If you made regular, on-time payments on your old card, doing the same with the new card will not cause you to see a drop in this area.
  3. Types of Credit: Diversity is key. Having a good mix of credit cards, auto and mortgage loans that you pay on time every month will help you generate a good credit score.  Since you were using a credit card previously, you will likely not see any difference here after a balance transfer.
  4. Credit Inquiries: Applying for a new credit card will put an inquiry on your credit.  As long as you are not applying for multiple lines of credit at the same time, you are probably only looking at your credit score dropping 5 points, which is only temporary.
  5. Age of Credit. Once you receive your new card, keep the old one.  Do not cancel it.  You want to keep your oldest cards open so you can build up that history for as long as possible.

Bottom Line: Opening a new account and transferring the balance over can save you money, as long as you do not charge more on the new one and focus on paying it down.  Do not expect a huge jump at the very beginning, but as you begin to pay down your balance by making on-time payments, you will see your credit score improve. The new lower credit utilization will help boost your credit score.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources:

http://www.cbsnews.com/news/how-a-balance-transfer-affects-your-credit-score/

How to Get Rid of Holiday Debt FAST

December 29, 2015 Posted by kingcade

We all have a vision of what constitutes “the perfect holiday.”  For many of us, it means countless presents under the tree, our children’s smiling faces on Christmas morning and that perfect meal with our family and loved ones all gathered around the table.  For some of us, making that vision a reality means putting it on credit cards.

If that was you this year, you’re probably wondering the next steps to take before the bills arrive and the interest starts mounting.

Here are some immediate steps you can take to help manage holiday debt in the New Year:

Make January and February lean months for spending.  With the plentiful holiday season behind us, it’s a good idea to start reeling in the spending and extravagance.  That doesn’t mean starve yourself, but it does mean sacrificing on splurges you would normally enjoy (i.e. – dinners out, visits to the salon, shopping, vacations, etc.)

Channel savings directly into those big credit card payments. Take a look at all of your credit card bills and determine which one has the highest interest rate. Make the biggest payment you possibly can afford towards that card, while still allotting enough money to pay your other bills and cover monthly expenses.

Look for zero-interest balance transfers.  BEFORE you send off that big payment, research credit card offers for balance transfers that allow you to pay 0 percent interest on the transferred balance for a certain period of time.  Just make sure you get the transferred balance paid off before the zero interest offer expires.

Sell unwanted items.  You will likely find that after the dust settles, you have some unwanted items and gifts around the house you no longer use or want.  Utilize Craigslist and eBay to sell these items and earn some extra cash.  This money can go towards making bigger payments towards your high-interest credit cards.

Start a savings plan for next holiday season. The best time to start saving for the next holiday season is right now!  If you save just $10 a week (the equivalent of a lunch out or a week’s worth of Starbucks runs) for 50 weeks, you will have more than $500 saved for next year’s shopping.   If you save $20 a week, you will have over $1,000 set aside for holiday shopping next year.  The easiest and most effective way to do this is by setting up weekly automatic transfers through your bank.

Make the holidays more realistic.  Discuss sensible downsizing when it comes to purchasing gifts next year.  Have a budget for gifts and stick to it.  Move to drawing names with family members for gift giving purposes (i.e. – Secret Santa) and discuss arrangements that reduce the challenges on travel for everyone.  The spirit of the holiday season should be about togetherness and giving thanks for all of the blessings we have- not something that causes you to go into debt.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources: http://money.usnews.com/money/blogs/my-money/articles/2015-12-22/how-to-quickly-get-rid-of-holiday-debt