Hi from Newleaf Exchange

[newleaf exchange]

Hello everyone,
My name is Peter and I write for a website called Newleaf Exchange. Part of the website is about credit cards and why/how people use them. I have been looking for a good website with great advice that is based in Australia. This website looks really good and I am looking forward to getting your thoughts.

I am interested to see what you all think of the different cards and benefits of them, the pro and cons and things I can advise our readers to look out for.

Look forward to chatting

Peter

 

[JohnK]

Welcome to AFF newleaf!

I would love to help but all I know about credit cards is how to apply and use balance transfer facilities. Just recently I have reduced my interest bill on credit card interest by well over 100% by just doing a few simple balance transfers between cards....

 

[newleaf exchange]

Hi JohnK,
Would you agree that balance transfers is something you would do to help reduce the debt or do you see it as something to temporarily save money?

Thanks

 

[NM]

Hi JohnK,
Would you agree that balance transfers is something you would do to help reduce the debt or do you see it as something to temporarily save money?

Thanks

Around here, balance transfers are more likely to be used by people moving funds between cards as they open new cards to take advantage of FF points promotions for new accounts. Of course there are poeple looking for the lowest interest options and in many cases opening a new card account offers a period of low or interest-free credit for balance transfers. When the interest rate for such balance transfers is less than other loan rates (say a mortgage) then it can be used to save interest payments. But you need to be careful to understand the terms and conditions associated with the balance transfer and discounted interest. In many cases any payments made tothe card will be used to reduce the balance transfer first and any purchases on the card go to the bottom of the payment list and start acruing interest at the full rate. So if using for interest rate reduction, best to keep the card for that purpose only until the low interest honeymoon is over.

 

[lmere12]

I have several c/cards used only for frequent flyer earning points. Chosen the card on the earn rate, bonus points given & the program that I wish to use. (QFF & Kris). Always paid in full, never paid interest.

 

[newleaf exchange]

I agree, using credit cards to build up frequent flyer points is a good way of getting multiple uses out of the money.

Problem is not everyone is as diligent with their payments as you...

With the ideas of moving from one credit card to the next to get the interest free periods, wouldn't it be better to just pay the cards off?

 

[JohnK]

Hi JohnK,
Would you agree that balance transfers is something you would do to help reduce the debt or do you see it as something to temporarily save money?

It is a combination of both.

I still pay the same amount on the credit cards but the interest payments have now more than halved. I am finding the balance on some of the larger balance cards is reducing and my overall debt is reducing.

 

[JohnK]

Problem is not everyone is as diligent with their payments as you...

The percentage of people payong credit cards off in full is small. And there are many reasons why most people carry credit card balances from one month to the next.

With the ideas of moving from one credit card to the next to get the interest free periods, wouldn't it be better to just pay the cards off?

An onteresting thought and not always possible.

e.g Credit card A has a $14,000 balance and paying interest at 12.74% pa and not free cash to pay the balance. Aply for credit card B and balance transfer $14,000 to card A at 0.99% pa and close card A.

After 12 months the balance on credit card B would be ~$11,000 thanks to the low interest rate and making the minimum repayment of 2.5% of balance each month. Just before credit card B has a chance to revert the balance transfer to regular interest rates it is time to apply for credit card C (or even credit card A again) and make use of new low balance transfer rate.

 

[newleaf exchange]

I understand that you can use a lower intrest rate card to help pay off another. At what point though do you start to cancel the extra cards? How do the banks view people having multiple cards? Wont the increase in cards make it expodentially hard to get more?