Balance transfer credit cards are specifically designed to consolidate all debt and make it easier for the consumer to pay back, and will often provide a 0% introductory rate on all transfers and new purchases on the balance transfer credit card, while performing the actual transfer at no cost to the consumer. This can give the customer time to organise their financial affairs, relieve the stress of worrying about multiple payments and ease the burden on their personal finances.
The average rate of interest on a credit card is 16%, and with any amount of initial debt built up, it can be impossible to keep up with bills that just keep increasing. Soon, you can spend your entire wage just on servicing debt, without thinking about the future. This vicious circle can be difficult to break out of. However, with some careful thought and choosing the right balance transfer credit card plan, you can break out of the cycle.
With one monthly payment to consider, you know exactly how much you owe, and exactly how much you will need to pay out. The “interest holiday” on some balance transfer credit cards can stop the rising trend of your debt and make your payments much more manageable and much less stressful. It is easy to apply for a balance transfer credit card, with many institutions offering them, and many companies existing solely for the purpose of providing this specific financial service.
There are potential dangers in getting a balance transfer credit card however. After completing the balance transfer, it is important that you use the new card’s low interest rate solely to pay off your existing debt, rather than using it as an excuse to run up more debt – this can be tempting during the introductory period of low interest. For the same reason, when you have changed to the balance transfer credit card, cancel your original card to remove the temptation to run up more debt. A balance transfer credit card cannot solve all of your debt problems without careful planning and examination of your own finances so you can try to come as close as possible to paying off all your debt as soon as possible.
If necessary, a cunning consumer who hasn’t fully paid off his/her debt could attempt a second balance transfer to a new company when the first’s introductory rate runs out. One must be careful in attempting this – companies will be wary about accepting you unless you have made significant progress on paying off the principal on your original balance transfer credit card.
Once you have decided to get a balance transfer credit card, it is important that you shop around and look for the best deal for you. Look at interest rates, in both the long and short term. If you realistically think you can pay off all your debt in a year, then look for the lowest one-year introductory rate. If you think it will take you longer, then consider looking to a more long term plan, one that offers a relatively low overall rate with no introductory period. Either way, it is worth calculating what you can afford to pay off monthly, and see which plan gets you out of debt in the cheapest and quickest way possible. With a little initial arithmetic work you will ultimately save yourself time and money. Don’t simply choose the first plan you see advertised – shop around. It is up to you to choose the balance transfer credit card that is best suited to your means and debts.
In conclusion, balance transfer credit cards have the potential to dramatically change your life and ease your financial worries, if used in the correct way and with the right intentions of getting out of debt rather than just sinking further into it. They are a means of empowering you and returning your life to normal, without the stress and burden of overdue debt.