Low-rate credit cards 'can help beat debt'
Low-rate credit cards can help consumers to beat debt even when lenders do not play fair, it has been claimed.
Financial guidance resource Money AU explains that cheap credit cards can become more expensive due to "negative payment hierarchy".
This is where the cheapest debt is paid off first, leaving interest to accrue on the more expensive portion of the credit card balance.
However, careful use of low-rate credit cards is suggested as being able to overcome this problem for many consumers.
Readers are told that multiple cheap credit cards can be used to spread different forms of spending – one for balance transfers, another for new purchases, for instance.
This gives the borrower the chance to clear the most expensive debt first while leaving the cheapest until later.
Money AU recently advised borrowers to attempt to increase the credit limit on other cards if closing one account.
This is so that they continue to use the same proportion of the overall credit available to them and avoid any apparent negative trend on their credit history.
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