Beating banks and credit cards

March 31, 2008 Some things are no-brainers, like if you can't afford to pay for it in cash - don't put it on a credit card. Because unless you pay your bill off in full, you'll accrue interest and whatever you bought will end up costing you a lot more than the original purchase price. But, easier said than done, and that is what your credit card company is counting on.

Scott Bilker, author of "How to be more Credit Card and Debt Smart" and "Talk your way out of Credit Card Debt" says, "In these difficult times, when you want to make every dollar count, you need to look at every aspect of your financial life to find savings."

So Scott says ask your credit card company to lower your interest rate. "Even if it takes 20, 30 minutes of your time, you can save thousands and thousands of dollars."

Scott says ask for a supervisor, and threaten to transfer your balance to someone else, close your account, or pay off your balance. Use the same tactics to get fees waived, even if you were charged those fees months ago.

"Fifty percent of their income comes from late fees, over-limit fees, all their fees," says Scott.

Also, read credit card offers carefully. 0-percent interest for six months might be bold print. A three-percent balance transfer fee in small print. Scott tells us, "Don't be tricked, because that's how banks can get you. They'll try to fool you in the math."

Scott says another way banks try to do that is in how they apply your payments. "Banks have in their terms that they can apply your payment to your balance any way that they see fit." Which means if you have a balance of $3,000 at a purchase rate of 9-percent, and a balance transfer of another $3,000 at 0-percent, "they're going to take that payment and apply it to the zero-percent first. So, effectively they locked in your other balance at that higher rate," Scott explains.

Scott's advice? Transfer your balance to another card that has a zero-percent interest rate. "But the key to being able to do that is to have another credit card with a zero balance and that's how you can be debt smart. That's how you use your credit cards to your advantage."

Also, use reward cards. Scott's family of five goes to the movies for free using his Regal Entertainment Group credit card. He says, "Now we haven't paid for a movie and this is really awesome - in about three years."

You can also use a reward card to save on gas. Scott has a Wawa card. "And so far I've gotten $600 in rewards from Wawa. And since they sell gas there that's $600 worth of gas that fills up my minivan for free."

Another tip: See if you've built up 20-percent equity or more in your home. If you have, eliminate your private mortgage insurance. Scott says, "Banks are never going to tell you that you're entitled to anything, even a lower rate or to have your PMI removed."

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