Recommendations:

1. Get a 0% APR balance transfer credit card
2. Transfer high interest balances
3. Don’t use this new card for other purchases

Annual Savings Potential: Depends on balance– could be $1,000 or more

Discussion According to New York Newsday, credit card interest payments were $116 billion in 2007, with another $23 billion in fees.  If you have reasonably good credit, your contribution to this amount should be about $0.  We all tend to think about the cash or travel rewards associated with a card we are considering.  However, if you are currently carrying a balance on one or more cards, not paying interest for a year will likely be worth far more than any of those other benefits.   (Use our balance transfer calculator to see how much you can save).    Try and find a card without a balance transfer fee — unfortunately most of them do at the current time.

Beware this Catch: More importantly, it can be more expensive than you think if you use your new card to make purchases during the 0% balance transfer period.  Most cards have a disclosure that says something along the lines of “Payments will apply to lower interest rates first”.    Let’s say you get a new card with an interest rate of 10% on purchases, with 0% on balance transfers.  Further, let’s assume you transfer $1,000 from another card, then rack up $1,000 in additional spending your first month.   You then make a $200 payment with your first bill.    Guess what — your card company will apply your payment to your 0% balance, and you’ll end up paying interest on the full $1,000!    As you can see, this provision can significantly reduce the benefit of the 0% APR.

There are two solutions to this dilemma.      You can try and locate a card with 0% APR on both balance transfers and purchases.   Alternately, use your new card to transfer the balances, then stick the new card in a drawer and don’t use it for any additional purchases.

Recommendations:

1. If you are using cable modem, consider DSL or even dial-up
2. Find free Wi-Fi

Annual Savings Potential: $240 (cable to DSL), more for dial-up or Wi-Fi

Discussion   Unlike most cable service, most phone companies price DSL based on speed.   If you are using the Internet primarily for things like email or reading web pages (as opposed to downloading large files), a lower-speed DSL (still about 10x or more dial-up) can be had for $20 or month in some areas, about 1/2 the price of cable modem service.   If your needs are even less, most dial-up is now less than $10/month.   After almost completely disappearing, we’re seeing more interest in dial-up in recent months.   Want to spend even less — like $0?   Many coffee shops and the like offer free Wi-Fi (although you might need to make a purchase), as do many public libraries.  If you completely give up your Internet service, you’ll probably want to have a free web-based email (e.g., gmail or hotmail) if you don’t already have one.