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There are a lot of credit firms advertising about consolidating your credit card debt. Your personal finance basics knowledge will agree that it is far better to pay a smaller amount each month for the same debt. To be honest that is obvious. But there can be a downside to this. And, in addition, do you know how to consolidate your debt effectively.
So, do you apply because of the advert that says ‘…we have the lowest APR for you here’?
If you have looked at these adverts for any length of time, you will be aware that these offers keep changing and there are always a number of offers to choose from. Sometimes it looks like it is simply a case of picking a supplier at random.
Just remember, these companies are there to make a profit. In this case they want to make a profit from you. They will structure their adverts so that you see what they want you to see. They are hoping you will not look further into the terms and conditions.
Have you noticed how these low APR offers are always for a short term? If you read all the terms and conditions you will find that after so many months, the APR you are offered will increase to their long term rate. It is important you are aware of this and check out the offer properly. In terms of the APR, there are three things you should consider
· Introductory APR
· Introductory APR period
· Standard APR
The introductory APR is what they want you to see. It is designed to be very attractive for you when you are considering consolidating your credit card debt. You will get a period of lower payments, which you can use to your advantage. You can use this time to give yourself a financial breather. The longer this introductory period is, the better it is for you.
The standard APR is a figure you should not ignore. In fact you should search this figure out if it is not immediately obvious. Remember the low introductory APR is specifically put there to lure you to put your business to them.
If the standard APR is too high for your budget then this card is probably not the one you should accept. In fact, the ideal solution is to find a card with a low APR and a long introductory period and pay off your whole debt before the card reverts to the high standard APR. If you are certain you can do this, then the high APR will not matter. You must develop the mentality of using these firms the way they use you.
Increase your personal finance basics knowledge and create a budget for yourself on a spreadsheet. Then you can properly evaluate any low introductory rate credit card and find the best one for your personal circumstances.