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Credit Cards: When the Usual Tricks Don’t Work

Dec. 5, 2014
Credit Cards
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Credit card tips and tricks can be found in every corner of the Internet. In fact, some are so popular that you’ll find them on almost every site you visit.

But what if you’re in a bind and the usual advice just won’t work? Don’t worry, the Nerds are here with solutions. Take a look at the details below – we’ll help resolve your toughest credit card dilemmas.

Problem: You have bad credit and won’t qualify for a balance transfer.

Solution: Consider a card with a low ongoing APR instead.

If you’re dealing with a mountain of credit card debt, you’ve probably heard time and again that transferring your balance onto a 0% card will save you a bundle on interest. But in order to qualify for a card that offers a primo interest rate promotion, you’ll usually need an excellent credit score. If your credit doesn’t exactly sparkle, this trick for saving money on finance charges won’t work.

But an often-overlooked alternative is applying for a card that offers a low ongoing APR, instead. Sure, paying 0% for a period of time with a balance transfer offer is preferable, but low APR cards tend to be easier to qualify for. Plus, moving your debt onto a card that’s charging an APR of, say, 10% will still cut down on what you’re paying in interest. If your current card is charging closer to 20% (which isn’t unheard of for folks with mediocre credit), refinancing with a low APR card might be a winning strategy for paying off your balance off faster.

Nerd note: Keep in mind that moving a balance from one card to another will almost always result in paying a fee. To avoid this, you might want to look into refinancing your debt with a personal loan from a local bank or credit union. These lenders are usually willing to work with customers with less-than-stellar credit, and again, you’ll likely score a rate that’s much lower than what you’re paying on your card.

Problem: Your income is irregular, so auto-paying credit card bills won’t work.

Solution: Use text or email alerts to stay on top of your payments.

Making your credit card payments on time is crucial to maintaining good credit. In fact, payment history makes up a whopping 35% of your FICO score, which is why many personal finance experts recommend setting up automatic payments for credit card bills. This way, you won’t have to worry about missing one.

But for freelancers and other professionals with irregular incomes, this tactic won’t do. If an automatic payment sends your checking account into overdraft, you’ll likely be out the same amount of money you’d pay in fees on a late bill.

The solution? Opt into text or email alerts from your credit card issuer that let you know when your monthly statement has closed and when the bill is due. This will give you a nice cushion of time to put your finances in order before the deadline to pay.

Problem: Your utilization is always high, and you can’t get a credit line increase

Solution: Start making twice-monthly payments on your card

If you tend to run a high balance on your credit card every month, your FICO score might be getting dinged because of your credit utilization ratio. You’ve probably heard that raising the credit limit on your card is a way to combat this, but again, you’ll have to qualify. If your income or credit won’t allow this, you’re probably wondering what to do next.

Actually, it’s simple: Just get into the habit of making twice-monthly payments on your card. This way, your credit utilization will remain low throughout your billing cycle and will look good to the credit bureaus no matter when your issuer sends them a report on your account.

Just be sure you’re forking over enough with each payment to keep your credit utilization ratio below 30% at all times, on all of your cards. Being mindful of this threshold will go far toward keeping your score in good shape.

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