How Honest is that Credit Card Comparison Site
As you watch television, surf the Internet and flip through your favorite magazine, you will undoubtedly see companies advertising that they can show you the best deals in plastic - credit - for you to consider. There are a few reasons to hesitate from relying too much on information that looks like it’s coming from a neutral source. The main one is because the source might not be neutral at all.
A recent Wall Street Journal story (a subscription is usually required to read Wall Street Journal stories) sheds light on how some companies offering to show the best credit card deals out there are taking explicit instructions from the credit card companies advertising on their site.
While it doesn’t necessarily mean the information is incorrect, it does mean that what is being highlighted is what the credit card company wants to sell. They are not the issues or highlights someone aiming to fully educate consumers would point out. The Journal story suggests most of the website operators are caving to credit card company demands.
This is just one more reason to be cautious about accepting offers for credit cards that offer low interest rates for balance transfers. It might be a worthwhile thing to do, but make sure you have done plenty of research, understand all of the fine print and are completely confident you’re making a sound decision.
When it would be worthwhile to switch, is when you are convinced that transferring a balance will save you a significant amount of money. Bear in mind that there are prices to pay by switching credit cards.
For one, if you transfer a balance and don’t cancel the older card you run the risk that comes from having more credit. You could end up in more debt trouble than you were in before.
Second, if you do cancel an older credit card, you end a relationship that has benefited your credit score. We don’t often recommend decisions based solely on how it will affect your score, but we can tell you credit accounts that have years of history generally affect your credit score more positively than recent accounts. So you could save a few dollars in the short term, but do something that reduces your ability to borrow for a house or car at lower rates later on.
In the end the best way to use credit cards is to pay off the balance of the card every month. That way you still rack up whatever rewards are offered, but don’t pay any interest on what you borrow.
A better way to get the perks you want from a credit card you plan to use like that, is to ask your current card companies for a deal. Armed with research you might be willing to make the switch. But if you can get the same deal with the cards you have, that can reflect much better on your credit score.
To learn more, contact a certified credit counselor today by clicking on the link or calling the number at the top of your screen.
Published Aug 27, 2014.