Credit Cards and Debt Interview with KOA Radio Denver
Interviewer: How many of us are starting the new year in the hopes of crawling out from under some severe credit card debt? How do we do that though? CreditCards.com’s Matt Schulz joins us now with some tips. Good Morning Matt.
Matt Schulz: Good Morning.
Interviewer: You say for starters we need to ask for a lower interest rate. What kinds of rates are people actually paying?
Schulz: Well the average rate on a new credit card right now is about 15 percent and has been for a while but if you are somebody who has bad credit that number is probably closer to 20. The good news is that you have a better chance of success than you would imagine if you choose to make that phone call to your credit issuer and ask them for a lower rate.
Interviewer: You know that is true in really every industry. I think I called recently and got a lower rate on my cable bill too. So you can pretty much negotiate anything when you call and talk to somebody face to face essentially. Is it too extreme do you think to cut up your credit cards and just pay for everything with cash at least for a while?
Schulz: If you are in severe debt it might be a good idea. It really is kind of all about knowing yourself and how you got in trouble in the first place. And if you are somebody who is just going through a temporary short patch with medical debt or joblessness it is one thing but if you are somebody who just cannot make payments on time or who can’t resist the lure of extra credit you may have to take some extreme measures.
Interviewer: Okay. You say one of those measures may be applying for a balance transfer. How does that work?
Schulz: Well balance transfer is just basically taking what you owe on one card with a higher interest rate and moving it to a card with a lower interest rate. And a lot of time you can get 0 percent interest on that balance for anywhere up to we have seen as high as 21 months on the City Diamond Preferred Card. And the thing to watch though is that those kind of cards will often come with a balance transfer fee of as much as 3 percent. And that can be significant.
Interviewer: Yeah. And then we of course have got to determine why we got into debt in the first place so this does not happen again I guess. Matt we are going to run at that. Thanks for the few minutes.
Schulz: Thank you.
Interviewer: Creditcards.com Matt Schulz.