Shuffling Cards to Improve Credit
Financial services are always looking for new customers. If your credit is
decent, your mailbox is probably full of credit card offers shouting "low-
introductory rate" or "no annual fee" in giant type. Don't throw them away!
Take advantage of the best deals to lower your interest costs and improve your
Introductory interest rates are hovering in the single digits for many credit
cards but there's a catch--the rate expires usually within a year or six
months, and then skyrockets up to the high teens. It's funny how the credit-
card company continues to send the same old bill. Unless you're paying
attention, you won't notice the interest rate just ballooned at the bottom of
your statement. But your debt expense will have inflated in a big way.
Pay close attention to that date and apply for another card, prior to the low-
interest rate expiring, that allows you to transfer the balance from your
current card. It's a card shuffling game and the best interest rate wins. If
you don't like changing companies, call your current card company before the
rate expires and threaten them with canceling unless they continue offering
you a competitive rate. Sometimes they'll agree.
If you're smart, you'll use the lower rate to pay off the card and decrease
your debt. But there's another reason to maintain more than one
card--improving your credit rating. Your credit rating is based on a scoring
system that looks at all your pieces of credit, high balances, low balances,
good and bad histories. A card with a fat balance pushed to the credit limit
will be assigned a higher number by the computer reading your history. But
the consumer with the same debt spread over several cards will score better.
It's the same debt showing up in several lower balances instead of one big
balance. Go figure!
The rationale is you're a better risk if you're not pegging your cards to the
limit. Of course, maintaining several cards complicates the interest-rate
juggling act, and means more checks to write each month. But it's one tactic
to consider if you're applying for a home loan and want your credit to look