It seems that almost every time you open your mailbox you find yet another invitation from yet another credit card company. Your eyes bug, your pulse races…you can’t get to a phone fast enough to get that card activated. These card companies tempt and tease you with low introductory interest rates hoping to lure you away from your current credit card company. You’re ready to transfer all of the debt you have on one card over to this new card at the lower interest rate. Smart move. Let’s jump ahead. Six months down the road, that sweet deal expires, and you’re looking at the same ol’ scenario you were facing six months earlier. But now, in addition to your existing debt, any purchases made at the lower interest rates immediately begin accruing interest at the newer, higher interest rate because the teaser rate has expired. “No problem,” you say. You’ll just reach into the mailbox and pull out yet another sweet deal. Seems like a logical way to get out of debt, right? Wrong. You’ve got to remember that the banks are in business to make money. Teaser rates are not a permanent solution to a debt problem. It seems like a good idea to bounce from one card to another, but every time you bounce, that information goes into your credit file. The number of inquiries on your credit coupled with the fact that you bounce from one card to another will work against you. These credit card companies want to make a profit, and they realize that if you are moving from one card to another you are only hanging around during the teaser rate period then moving on. That well will run dry. Believe it. That’s not to say that you shouldn’t take advantage of a low interest rate offer, just that you shouldn’t become a bouncer. If you can get a really low interest rate on a card, grab it. Transfer an existing balance to that card and do not make any new purchases. Then work hard to pay that balance off while the interest rate is low. This way, when it rises again…and it will rise again…you won’t have to be worried about getting behind again. Dave Lewis is a Los Angeles-based financial consultant.
