How to use low APR Credit Cards to reduce your debt

If you have a large amount of credit card debt, and you can't seem to pay of your cards, you should take comfort in knowing that you are not alone. A large percentage of Americans owe thousands of dollars in credit card debt, and about 50% of Americans only make the minimum payments each month. It can take years to pay off your credit cards if you only make the minimum payments.

The idea of using a credit card to avoid debt may sound strange to you. Because the credit card industry has become so competitive, many companies are now offering low interest rates or even a 0% introductory rate on their cards. While low interest credit cards are nothing to be afraid of, if you use them improperly it can lead to a horrible financial strain. Being responsible and understanding how to manage your personal finances is important. The first thing you want to do is make sure you are living within your means.

It is also a good idea to have a plan in order to get out of debt or avoid it. A credit card with a low APR can help you in a situation where you have balances on other credit cards which have high interest rates. Once you're approved for a credit card with a low APR you can transfer your balances onto it and begin saving money. Credit card companies make their money primarily from interest. Because it is difficult to pay off the principle once you have a high balance on your credit card, many credit card companies earn billions of dollars annually just from the interest paid by the borrowers.

If you have a credit card which you owe $9000 on, transferring the balance from a card which has a 20% interest rate to a card which has a 1% interest rate can allow you to save over $1,000 each month. Once you have transferred your balance, you want to make sure you're responsible and don't go out spending the extra money you've saved. It is also important to remember that many low APR credit cards only last for a few months before the interest goes up.

Most of these low APR cards only keep the interest rate low for about 6 months. During this time you will want to pay off the principle as much as you can. Once the interest rate goes up, you can cancel the card and switch to another company which is offering a low APR card for six months.