Common Sen$e: It’s Time to Audit Your Credit Cards (Part 2

ART WOOD

In last month’s column, I discussed doing a credit card audit, and what to consider when choosing which credit card is right for you. In that article, I focused more on people who don’t typically carry a balance and are looking for rewards. I am not sure what percentage of folks that covers, but from what I see as a mortgage professional, it seems as though the majority of folks do carry balances, so let’s examine those people in this article.

Let’s start with the most important part of this discussion: interest rate. We all get credit card offers in the mail: 0% APR, or 1.99% for the life of the balance, or something similar. They all look awesome, but the devil is in the details and there is not a “one size fits all” when it comes to credit card interest rates. If you are someone with a recent high balance and have the means to pay it off within the year, then the 0% cards may make a world of difference. The problem with those cards is that the 0% only lasts for a limited time, and when the rate goes up (usually quite considerably), then you are in the same spot you were in before you transferred the balance to the zero-rate card. But if you can commit to a payment plan that will pay the balance off in the specified time, then the 0% offers are a great option. Are you someone who has substantial balances that will take a much longer term to pay off? You need to look for the lowest fixed interest rate you can find, determine a payment plan that will work for you, and set goals for getting the balance paid off. If you have the time and energy to play the credit card balance transfer game, where you keep transferring the balances of your cards to lower rates, more power to you, but make sure you keep an eye out for which balances you can actually transfer and any fees associated with the transfer. The fees alone may negate any real benefits.

For each of these scenarios, never, I repeat, NEVER be late on a payment. In the small print, the credit card companies tell you that those 0%, or low, interest rates, will change if you are late or miss a payment, and then you have to start the entire process all over again, not to mention the effect it can have on your credit history. Speaking of credit history, if you have a great payment history, but your balances are high as compared to your limits, inquire about getting a credit line increase. Believe it or not, if your balance stays the same and your limit increases, it will improve your credit score.

As we close out this topic of doing a credit card audit, I’ll state it again: credit cards, like mortgages, are not a ‘one size fits all.’ Whatever your situation is, there is a perfect card out there for you that will meet most, if not all, of your needs. Do your research first before you apply, as you don’t want needless credit pulls, but once you get that perfect card, commit to the strategy that led you to choose that card in the first place.

ART WOOD (NMLS #118234) is the branch manager of The Art Wood Mortgage Team of Goldwater Bank, located at 2341 Main Street in downtown Tucker. “Tucker’s Mortgage Guy” for sixteen years, he is a former Tucker Tiger (Class of ’92), and co-founder and organizer of Taste of Tucker. Family guy, community guy, and definitely not your typical mortgage guy - it’s all that he does that makes Art Wood who he is. Contact him at 678.534.5834 or art.wood@goldwaterbank.com.

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