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Susan Tompor: How do you pay off all that credit card debt?

Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

And here's another good tip: You're not going to get a 45-day notice when an limited introductory rate expires, either. So you need to figure out when that 0 percent rate for 12 months goes up to 15 percent or 20 percent when the deal ends, according to Matt Schutz, senior industry analyst for CreditCards.com.

And you won't get a 45-day notice when your active duty in the military ends, Schulz said. Federal law caps credit card interest rates for active-duty service members at 6 percent.

Pay your bills on time

If you don't pay credit card bills on time, you'd risk getting slapped with far higher penalty rates for some time, too. Penalty rates can be charged on existing balances if you're 60 days late or more with a payment.

Remember, credit card issuers are required to re-evaluate your payment history and take steps to restore the original lower rate after six months of on-time payments -- if your card issuer raised rates because of a 60-day late payment.

Shop around for a better rate

"In a perfect world, the best way to avoid paying interest on a credit card is to pay the entire balance off every month," said Barker at the FDIC.

"However, we don't live in a perfect world so for those who do carry a balance, balance transfers can save money, assuming the person is diligent about keeping track of when the zero- or low-interest rate period ends."

But she warns that consumers should be cautious about opening up a number of new credit cards just for the low or no-interest rate. Each time a lender looks at the potential cardholder's credit in order to open a new account, the person's credit score can be affected. Other lenders may be wary when they see lots of credit applications on a report, as well.

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Schulz said several card issuers are still offering limited 0 percent deals -- including Citi Diamond Preferred, Bank Americard MasterCard, and Slate from Chase.

No-interest offers can run from 15 months to 21 months, depending on the card. Remember, though, once the intro expires, you'd look at variable rates that could climb to the 14 percent to 24 percent range. Also pay attention to any balance transfer fees that might be charged.

Get a real number

About The Writer

Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stompor@freepress.com.

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