The Credit Card Transfer Trap

Can moving from credit card to credit card hurt your credit rating? Yes, for example, you transfer part of your balance from one card to another, repeat, repeat. Now when creditors look at your credit report they see 4 open accounts showing a potential debt of the total amount of each of the limits, not the balance owed. They consider this available debt which means you could easily max these cards out and not be able to repay. This will appear as being "overextended."

· It is important to call your creditors and close some of these open accounts. Your credit report will read "closed at consumers request.

· Transfer balances to a low rate credit card if you can get one. Set up a monthly payment schedule for wiping out the debt.

· After just one late payment, your introductory rate may switch to a rate as high as 21% and can take up to a year of timely payments before the credit card company reduces your rates again. Banks that charged $7.00 in the 90’s for a late payment are charging up to $29.00 now.

· Trying to continue to find credit card "teaser rates" will become less likely because issuers can identify "swappers" from their credit report. It shows accounts that were opened for a short time and then closed.

· Spend less on gifts. Be creative rather than extravagant with friends and family.