Author Topic: Getting another Credit Card?  (Read 4687 times)

Hey Codo

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Getting another Credit Card?
« on: August 01, 2013, 06:49:59 AM »
Hey all,

I was wondering if it is worth it to get another credit card. I have gotten 2 this year, one with a 25% APR and one with a 14% APR - those are the only 2 I have.

I got into trouble with the 25% APR one and owe $4,171.03...so a fellow mustachian suggested I maybe look into getting a 0% APR CC with a low transfer fee. I actually found a credit card with 15 months 0%APR  and no transfer fee!!

Check below
http://www.nerdwallet.com/blog/top-credit-cards/nerdwallets-best-balance-transfer-credit-cards/

So my question to yall is it worth it to do this? Will my credit score be affected if I take out another credit card?

My top priority is paying every extra penny (after consulting some very wise Mustachians to this debt, it's an EMERGENCY).

Cheers,

Codo

madage

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Re: Getting another Credit Card?
« Reply #1 on: August 01, 2013, 08:12:33 AM »

So my question to yall is it worth it to do this?

You'll certainly save a lot of money on interest if you're disciplined and don't run up additional charges. Given your recent history, that's questionable.

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Will my credit score be affected if I take out another credit card?

Yes, there is a temporary hit to your score, but that probably matters a lot less than paying 25% interest on $4+k. Your credit score will bounce back if you figure out how to responsibly use credit.

In my opinion and experience, the hand-wringing in the media over credit scores is pretty ridiculous. That said, it would be a good idea to get a free account at Credit Karma or one of the other free "FAKO" score providers (I don't think there's any reason to pay for your FICO score). If your estimated score is already low (below 700 or so), you might have a low chance at approval on another card anyway. If you're declined, the credit check will still hurt your score a little bit. The effect of a "hard pull" wears off in a few months.

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My top priority is paying every extra penny (after consulting some very wise Mustachians to this debt, it's an EMERGENCY).

You're getting it.

Hey Codo

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Re: Getting another Credit Card?
« Reply #2 on: August 01, 2013, 08:38:19 AM »
Thanks Madage! You're right, my past history experience with credit cards is questionable...but I've found a great solution to this after reading this blog. I no longer carry my credit cards. If I don't have my credit cards in my wallet, then i can't use them to spend! I also keep a sticky notepad in my bathroom with my credit card debt number and sallie mae loan number on there. Every time I pay off my debt by some amount, I take off the top sticky note, and rewrite the lower number on the next note. This may seem silly, but seeing those loan amounts every morning, constantly reminds me to pay those off ASAP. It's also rewarding to see that number get lower and lower.

Still debating about signing up for another credit card. I know I can be responsible now, because I discovered and am reading every post on this article. Still have a lot to learn though and a long ways to go.


Eric

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Re: Getting another Credit Card?
« Reply #3 on: August 01, 2013, 09:08:51 AM »
How long will it take you to pay off the $4K debt?  If you're only talking a couple of months, it might not be worth it, but if it's going to take 12-15 months, then yes, I'd probably go for the new card.

Another Reader

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Re: Getting another Credit Card?
« Reply #4 on: August 01, 2013, 09:13:56 AM »
If your current credit card rates are as high as 25 percent, it's either because you made late payments or are otherwise considered a high credit risk.  It's unlikely you would be approved for a zero percent balance transfer to a new card.  Do you know your credit score?  Have you reviewed your credit report?  You can get a reasonable idea of your score for free by signing up for Credit Karma.  You are entitled to a free credit report from each of the three major reporting agencies at annualcreditreport.com.  In your shoes, I would sign up for Credit Karma and if the score is low, get a credit report from ONE reporting agency.  Work on fixing any mistakes and get any problems you caused resolved so they can age off the report.  Get the report from another agency in four months to see if the situation has improved.

In the meantime, pay off that 25 percent card ASAP.  It's not that long ago rates over 18 percent were prohibited as usurious.  In the current low rate environment, the rate you are being charged is more than usurious, and you should not allow this level of usury by paying it off ASAP.

Hey Codo

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Re: Getting another Credit Card?
« Reply #5 on: August 01, 2013, 09:14:07 AM »
My goal is to pay it completely off by Xmas. I recently paid $240 down on the credit card and I can put another 1K down on July 15th. So that would bring my total down to about 3k. So probably 4 months.


Hey Codo

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Re: Getting another Credit Card?
« Reply #6 on: August 01, 2013, 09:15:56 AM »
This was my first credit card and the standard rate they issue to all new users is 25%, or so they say. I have an average credit score that is getting closer to 700.

Another Reader

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Re: Getting another Credit Card?
« Reply #7 on: August 01, 2013, 09:24:17 AM »
Sounds like you are on top of this.  In your shoes, I would pay off the $4k and consider the experience as a life lesson.  Move on to saving and investing so you never have to pay anyone 25 percent again.   Put yourself in the situation where you control your money, the money does not control you.

 

Wow, a phone plan for fifteen bucks!