CREDIT CARD CALLS FROM WHO?
CREDIT CARD CALLS FROM WHO?

I have received literally hundreds of calls, sometimes two and three times a day, telling me that currently I have no issues with my credit cards but if I am looking for a new credit card with a lower interest rate, “press one.” The real reason behind this call may very well be an attempt to induce you to refinance your credit card debt on another credit card. The first thing you must ask yourself is: why is someone calling me to help me refinance my credit card debt on another credit card? The answer is really simple. Generally, if your credit score is high enough, these third-party operators, if you agree to their terms, will sell your current credit card debt to a different credit card company, promising a substantially reduced interest rate on the outstanding debt. These people are not actually credit card companies. They are solicitors who work on a commission to sell your debt Great, you say. Well, maybe not. Frankly, what are your chances of paying off a large credit card balance that you have moved from one credit card to another? The chances are slim. So, you are offered a very reasonable interest rate for a relatively short period of time. Of course if you miss a payment or do something else that violates the agreement, the new company has the right to spike your interest rate into the stratosphere. Even so, after your complementary reduced interest rate period expires there is a strong likelihood that the interest rate will then increase to a point probably substantially greater than the interest rate you are paying before you refinanced. Most likely, all of these dangerous details are not explained, except in a voluminous written agreement in very small type that is next to impossible to read.

There is no free lunch. When you get a call about a credit card opportunity, or get a call from someone that you don’t know about your credit cards, hang up! If you are interested in refinancing your credit card debt and reducing the interest rate, it is probably better to check online and see what offers there are, so you can take your time and carefully examine the terms of any new agreement. Some people will refinance their mortgage, taking out cash with an interest rate of around 4%, to pay off a credit card debt with an interest rate in the neighborhood of 18 to 21%. This is a good move, but it is important that you do not then build up that credit card debt again on those cards you just paid off. If you’re going to pay off those credit cards with the mortgage refinance, make sure that going forward you are able to pay the full balance on each of your credit cards every month, rather than again falling into additional debt. Credit cards are dangerous financial instruments. I know, because I have been there.

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