I have a few credit cards (and yes, I use them responsibly, get “points” for them, and pay them off on time). Recently I got an email suggesting I transfer a balance from one of my other credit cards, to my “Big Bank” credit card.

I didn’t really worry about it, since I never carry a balance. But – since the email kindly broke down what I could if I did do a balance transfer, I thought it’d be a handy thing to share with folks.

The “Big Bank” credit card was offering the following:

• A “special” low annual interest rate of 1.99% on balance transfers
• The rate would apply for up to 6 months
• A balance transfer fee of 1% of the balance I’m transferring would apply

And how much would I save?

• If I was carrying a 5,000 balance on retail store/gas credit card, and it had an interest rate of 28.8 %, I’d pay 481.80 in interest over 4 months
• If I was carrying the same balance on another credit card, with an interest rate of 21.99 %, I’d pay 364.82 in interest over 4 months
• But – if I transferred it over, as was only paying 1.99% a month, I’d only be paying 82.45 a month! And this includes the 1% balance transfer fee.

Overall, it sounds like a pretty good deal. And it is – is you make sure you pay the balance off before the rate goes up, and you don’t do anything that could cause the bank to revoke their offer, and start charging you the full interest rate (Always read the fine print!).

Of course, the best thing to do is just pay off the balance in full NOW, but that’s not always a viable option.

Have you ever done a balance transfer? Or sat down and calculated how much you could save with a much lower interest rate?

A few weeks back, I put up a post about living paycheck to paycheck . I said I’d start a series on how to start making a change in your financial lifestyle. If you haven’t already read this first post in this series, please check it out: Calculating your big financial picture.

Even though it might be discouraging to total up your assets and debts, it’s important to do in order to figure out where you stand.  I think if you don’t have a good handle on what you owe, then it’s pretty hard to figure out the best way to dig yourself out of it.

One of the biggest problems people are getting themselves into these days is credit card debt.  Sometimes it starts during school, when you have access to credit, but not a lot of income – and sometimes it starts after you graduate, with all the expenses that come with “establishing” yourself. With others, it comes with a life change – a new baby, a move, or a job loss. Expenses just seem to start racking up, and the easiest thing to do is start charging them.

So, what do you do when you’re overwhelmed with credit card debt? While trying to figure out where you can cut back is definitely worthwhile, sometimes the payments may just be more than you can handle. In that case you need to contact the credit card company directly. So, what do you do?

1. Call the credit card company and explain your situation. Use some wording like the following “I think I’ve been a good customer. I’d like to stay with you, but I really want you to lower the rate on my card. Can you help me?”

2. If they don’t say yes – then ask to speak to a supervisor.

3. If they don’t say yes, then keep asking to speak to someone up the chain until you get the answer you’re looking for.

It’s really not that complicated – it just takes some time and perseverance. And it can work – check out this CBC story on it.

If they refuse to drop your rate, then your best bet may be opening a new card with a zero percent interest rate and transferring the balance. I’ll talk about how to do that next week.

Have you ever tried negotiating with your credit card company? How did it go?

I just recently came fairly close to maxing our my credit card – I came in just a few thousand shy of the limit. Now, before you kick me out of the personal finance bloggers club for backsliding, please keep the following in mind:

1. The expenses were anticipated. And they weren’t for anything fun, like a crazy vacation or a new car with all the bells and whistles.

2. I just paid off the bill. In full. From savings.Not doing anything crazy like using my line of credit to pay off my credit card.

Anyways, with my most recent bill I got a letter, and I found the wording in the later pretty darned funny. It said.  “We are writing about your (credit card name here) Credit Card and are pleased to advise that, because you have effectively managed your account, we would like to offer you a credit limit increase.”

Basically – you just spent lots of money, so here – we’ll give you the means to spend more.  And I decided to take them up on it – it never hurts to have a higher limit, as long as you know you won’t waste it, and you can pay it off.

But what I love the most was the way they put it “you have effectively managed your account”. It basically implies that the best and only way to use your credit card is to try and max it out! In fact, we have no idea why you haven’t done this before! Congratulations on joining the club!

There’s no real moral to this post- I just wanted to share my amusement with everyone.

Have you ever been asked if you want to raise your credit card limit? Do you remember the wording used in the offer?

I just got my credit card bill. It’s over 5000 grand for the month. Now – before you start thinking – what is this girl doing, giving out financial advice when her credit card bill is so high?! It does have mostly essentials on it (transportation, groceries, gas), but I’ll freely admit that it has some not so essentials on it (dinner out and Mr. Canuck Buck’s trip to HMV).  The biggest chunk is medical, alas – something that is not covered by our health care system or insurance.  So, I am normally a tad more frugal.

Anyway, a note on the last page of the bill caught my eye.  It says “If you only make the minimum payment every month, it will take approximately 21 year(2) and 11 month(2) to pay the entire new balance shown on this statement.

21 years?! Almost 22 years? Are they nuts? I’m hoping to be retired in 21 years – not still paying off a credit card bill I ran up in my 30′s. And that’s assuming I don’t ever spend anything else again on this credit card.

I had friends in university who just paid off the minimum on their card and thought they were doing well. I didn’t really have that option – my parents did not co-sign anything for me (I never thought to ask!), so the most credit I could get was 500 bucks a month.  I remember a “friend” lording it over me that she had a higher  credit limit than me because her parents had cosigned for her.  She was much quieter about the whole situation once she had to start paying off her bill.

I guess I just can’t understand why on earth you would take the route of only paying the minimum. I know I’m lucky I’ve never been in truly dire financial need where I couldn’t pay off my credit card bill, but I’d like to think good sense, and a bit of restraint have helped me from running up a bill I couldn’t afford.

If you are in the situation – get the heck out of it! While you really need to take a good, long look at your spending habits, you may need to take some drastic measures in order to pay your bill of faster. There’s anything from getting extra hours at work, to transferring to a lower interest card, to negotiating with your credit card company.  They’re all worth a shot – cause who wants to be paying a bill you racked up 20 years later!

Have you ever just paid the minimum on your credit card? How did you break free from this habit?

I recently received cheques from American Express. I normally just shred the letter and cheques without even looking at them, but decided it was time to finally have a look. So, here’s what the nice folks at Amex had to say to me.

• They were delighted to offer me all purpose cheques with a low interest rate
• In fact, I could benefit form a low rate of 0.99% for up to 6 months!
• I could use this cheque for just about anything – home improvement, vacation, or when credit cards are not accepted, like my dentist or doctor’s! (My dentist takes credit cards, and so does my doctor..I doubt they’d want a cheque).
• They are easy to use – just fill them out like I would a regular cheque.
• The cheque amount will be charged to my card account
• A low 1% balance transfer fee will be charged on my cheque transaction amount, and interest is payable on the amount of this fee at the applicable interest rate for purchases. Wait, what now?

Okay, I actually tried reading the Terms and Conditions and got completely lost. i understood about how long the 0.99 rate was good til, and that it was bad to miss a payment, and that would make the nice rate go away.  And then I got lost.I think I may have to pay interest on a fee – or something like that..? And different interest rates in different cases.

It made my brain hurt. I can certainly see how people run into trouble with credit card companies.

I don’t think I’d use the cheques at all. There aren’t many places that prefer a cheque over a credit card, and I don’t carry a balance anyways, so a lower rate isn’t much use to me.  I can see some benefit (if I actually understood the things correctly) to using the cheques over your credit card, if you really needed to pay for something, and would have the money to pay off your balance in the near future. And I guess they’d be helpful for balance transfers.

I’d still advocate the “don’t buy it til you can pay for it” route though.

Have you ever used cheques from your credit card company? How was your experience?