One of the most frequently written topic in the world of credit cards is the act of consolidating one’s credit card debt into a new credit card that offers a 0% apr. There are many advantages of transferring any exisiting which you are paying high interest to a card that allows you to get 0% financing for a period of time. However, there are pitfalls that you have to watch out for and this may not be the best thing to do all the time.

The thing that you have to be aware of is that one of things credit bureaus look at is the amount of debt you carry versus your available credit. But it not just your total debt versus total available credit. The credit bureaus also look at “individual credit card debt versus individual credit card limits”.

Hence, you have to also look at your individual’s credit card utilization as well as your total credit utilization. If you end up having a high credit utilization on cards which you have transferred a balance to, your score could actually end up lower even if you end up saving on interest costs. You have to watch this carefully and weigh the potential interest savings versus potential drop in credit scores.

If you are just doing a 0% transfer once in a while to take advantage of deals, that is alright. But if you are in a hurry to improve your credit scores because you want to apply for a loan, then you should not consider consolidating your credit card debt immediately because you may potentially hurt your score. You should only do so after you have got your loan.

This entry was posted on Sunday, March 25th, 2007 at 02:47 and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.