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If you and your spouse have some separate credit card accounts, you can use this strategy to lower interest rates, increase your credit scores and hopefully pay off your credit debt faster.

I’ve been effectively using this strategy for the last few years, and if used with care, works great. But credit isn’t something to be taken lightly under any circumstance. so,..

Disclaimer: Credit should only be used in a controlled manner. It’s very easy to lose control and have debt rule your life. Don’t let this happen to you!

Follow the jump for details.

You and your spouse have separate credit records and histories with the credit bureaus. By leveraging these histories, it’s possible to get credit cards that have higher limits and lower interest rates.

Step 1 - Who’s Better?

Find out who has the better FICO score if you don’t already know. You can do this by going to any of the credit reporting agencies and getting you and your spouses’ FICO score. This is the starting point.

Step 2 - Build Credit

Now, for the person with the lower FICO score, call all the credit card companies that are either in their name or they are listed on, and ask to have your interest rates reduced. (You should do this every 6 months anyway for all accounts, but this step is particularly important now.)

Once you have gotten the interest rates as low as they’ll go, also request credit-limit increases. The more you get, the better. Final step, try to negotiate some no-balance transfer fee transfers on the credit cards you’ve just negotiated the interest rates and credit increases on.

Step 3 - Move the Bait (Credit)

Now move balances from credit cards that are only in the name of the person with better credit, to those that are only in the name of the person with worse credit. This will temporarily make the credit rating worse for the person with bad credit, but will improve the credit rating for the person with good credit.

Continue doing this until you have maxed out all the credit cards. The end result should be you’ve moved a significant amount of credit from one side of the table to the other. Ideally this would leave the person with good credit a number of credit cards WITH ZERO BALANCE. That’s the goal.

Step 4 - Watch the Trap

Credit card companies hate to see their cards unused. Also, other credit card companies are continually on the lookout for new customers that have good credit ratings. You’ve set the trap by having available credit and a good credit score.

Now sit back for a few months and watch the offers start to come in. If all works out right, the ‘good credit’ person should begin to receive offers for new cards (be on the lookout for those with low interest rates and no-cost balance transfers in particular). They should also be receiving offers from existing accounts for low/no cost balance transfers.

Step 5 - Spring the Trap

For the offers with no or low cost balance transfer fees, call them up and see if you can get a final rate reduction. For those with low interest rates, call and see if they’ll do low or no-cost balance transfers. Then, spring the trap!

Transfer the balances from the bad credit side to the good credit side, locking in as many low-interest rate offers as you can. Using this process I’ve racked up 3-4 credit accounts with Zero Interest for the Life of the Balance Transfer (meaning for the balance transfer, I pay no interest on that amount) and none of our credit cards are over 7.9%. This is the ultimate goal.

Wash, Rinse, Repeat,.. With Care

You can repeat this process back and forth, ping pong’ing between yourself and the spouse,  until you get to the point where all the credit is on low or zero interest accounts. Remember though, the goal is to get OUT of debt, not deeper into debt. Once you’ve gotten the balances to the lowest point you think they can go, you should start your Debt Snowball Plan to eliminate them completely.

By using this plan with care, and using the debt snowball at the end, you can save a considerable amount in interest, get out of debt faster and take control of your finance back from the credit card companies.

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