Is it smarter to have one credit card bill with a higher interest , or a couple?
Answers:
Find a card with a extremely low introductory interest rate and an interest rate of 18% or lower after the intro. Transfer all the balances to this card and then cut the other ones up (or keep one if you want to have two cards). This should give you some time to pay down the debt and save you enough money in the short run to make up for any difference in the long term interest rate. It is important to get rid of the old cards so you don't charge them back up after you transfer the balance. Make sure there are no fees for transferring you balance before you do this.Hope this helps.
Why don't you contact the card company with the higher rate and explain that you have other cards that have an interest rate that's lower. You might be surprised when they drop your rate. Tell them you are deciding which company deserves your business and you will give them one last try to reduce your rate. If you have been on time and good about paying they certainly will do it. Good Luck...
Having the ONE credit card with a rate less than 20% is NOT a bad rate. The average rate of interest is not seen as high until it is around that amount. I also don't see the benefit of having more than one card as the interest rates add up. I would not have more than two if able to. In case one card is not accepted somewhere or doesn't scan at a store ,then you have a back up one. Always avoid having a card with an annual fee and avoid interest rates higher than 19%.Paying one interest rate of 16% is better in the long run than three seperate ones.
I agree with Lyn. Contact them to lower your rate.
And as for what is smarter, that depends on whether you want less payments or lower cost (interest rate).
It is better to have several cards at lower rates. You want your overall interest rate (or average interest rate) to be as low as possible. Interest doesn't add up based on how many cards you have.
Look at it this way--Say you have three savings accounts with $100 in each of them. Each account earns 3%, 4%, and 5% respectively. That doesn't mean you're earning 12% on your money--it means you're earning the average which is 4%. You calculate the average by multiplying the balances times the rates and dividing by the number of accounts--or credit cards.
So in this case the calculation is ($100x3%)+($100x4%)+($100x5%) / 3 accounts = 4%
There is no benefit to only having one payment (as opposed to three) except that it is perhaps easier to remember to pay one card than three.
It's better for your credit to have more credit cards and it's always better to have lower interest rates. However, if you are having trouble remembering to pay three bills on time, put them all on one card.
The method that allows you to give the least money all together to the credit company until you have no credit card debt is the best. The lower your interest rate(s) the less money you will be paying. If you can consolidate all your debt on a fourth low interest card and pay it off quickly you may be better off if you pay off in time to keep your rate low.
As a general practice DO NOT have credit card debt that you pay interest on. This makes you poor and the credit card company rich. If you have a lot of debt consider getting a bank loan at a lower rate than your credit cards and pay off your cards.
It is best not to have either. Many studies show that you actually spend 16 to 18% more when paying by credit cards as opposed to using cash. If you are wanting to get out of debt, all you should have to do is tell the idiots who said they won't lower your rate (16% card) that you get about 25 offers a week all with a 0% intro. offer and it would be just as easy to transfer the balance to one of those. if they want to get 16% of zero that would be fine with you. You may want to do this any way and get out of the credit card game all together (my recommendation).
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