It makes sense if you are using any type of credit to get the lowest interest rate available. This is particularly important if you are using credit cards on a regular basis, as the interest rates on these will be high. Most people are probably aware of the practice of balance transfer, which requires applying for a new card, with a low balance transfer rate, and transferring the balance from your existing card that has a higher interest rate. This practice makes perfect sense but if you already have a number of credit cards and apply for more any rejection may affect your credit rating .
The answer to this problem is what is known as the 'balance shuffle' which works like this.
- look at all the credit cards you already have, whether there is a balance on them or not, and note down the current interest rates you are paying on each card
- contact each credit card company and ask for a reduced rate on each card stating that you are getting a lower rate on another card and would like them to match this rate
- if you are successful you will have reduced the interest you are paying on a monthly basis by making just a few phone calls
- now make a note of the card that charges the lowest interest rate
- check all your other credit cards for any 0% balance transfer offers for existing customers, these deals are not always advertised
- select the card with the lowest regular interest rate, or the card with the lowest balance transfer rate, this will be your 'shuffle destination card'
- move as much of your existing balance on your card charging the highest interest rate onto your 'shuffle destination card' making sure you check that this transfer will only attract the low interest rate and not a higher rate for balance transfers
- if you have managed to move all the balance from the highest interest rate card then move to the next highest interest rate card and transfer some or all of this balance
- repeat this process until you have transferred up to your credit limit on the 'shuffle destination card' or have moved all the balances on your other cards
- you will now have reduced the interest being payed on a large part of your credit card debt and this means that your debt will be paid off quicker
- if you are using a 0% balance transfer offer then make sure you note the expiry of this offer and once the offer has expired repeat the process from Step 1 using the post-offer rate
You have now managed to reduce the interest you pay on a monthly basis on your credit card debt which will enable you to become debt free quicker.