This in my opinion is a great article. It is very to the point, very truthful, and in your face .I like it and it will give you the hard facts about what you do or do not do with your money. Great article Jean Chatzky
By Jean Chatzky
Lie #1 Call your credit card company, and it will lower your rate Over the past 15 years I have been asked many times what to do when you’re try-ing to get your credit card company to lower your interest rate. And I’ve generally answered: Phone the toll-free number on the back of your card and ask. If the customer service rep says no, get the supervisor on the line and ask again. I gave that advice frequently be-cause it worked—according to one study, more than 50 percent of the time.
Recently, however, that strategy stopped producing results. Even more disturbing, some people who made those calls let me know that while they were talking to the card companies, they learned their credit lines had been slashed or their interest rates had gone up. The Amer-ican Bankers Asso-ciation says the queries didn’t trig-ger the adjustments; consumers merely hadn’t received the notifications yet.
I did some research, and today I advise people to contact their credit card com-panies only when they are having trouble making payments and only if their credit rating is strong. In that case, the bank may be willing to lower interest rates in the short term or slash an out-standing balance. (If you do this, however, be prepared for possible long-term conse-quences, such as a lower credit limit and higher in-terest rate.) The message? To pro-tect our futures, we all need to keep abreast of the new rules.
Lie #2 It’s smart to use low interest–rate savings to pay down high interest–rate credit card debt.
The thinking used to be, if you take money out of a savings account that earns an anemic two percent and use it to pay off credit card debt that’s costing you 18 percent, you’re pock-eting 16 percent—and there’s no better guaranteed return on your money (except, perhaps, a 401(k) match).
That basic math still holds, but the response of credit card companies has changed. Now they’re “chasing the balance,” says Credit.com president John Ulzheimer, author of You’re Nothing but a Number.
It’s simple: You pay down your balance; they reduce your credit line. That hurts your credit score, since it looks as though you’ve maxed out your cards.
It raises another problem: If, down the road, you need to use your cards for an emergency, the money won’t be there.
That’s why now, more than ever, it’s crucial to have savings of six months (for couples) to nine months (for singles) of living expenses.
So my advice now involves two steps: First, get that cushion safely socked away. Then start paying down high interest–rate debt.