Credit card balance transfers can be used legally as a way to repay debt. One of the major advantages of choosing this method of credit is that a lot of credit cards offer 0% rates on balance transfers. A 0% rate ensures that after you’ve paid the initial arrangement fee no other charges are incurred as long as the balance is repaid or transferred somewhere else before the introductory period expires.
A second major advantage of this type of credit agreement is that you can adjust the amount repaid each month to suit your personal budget. I’d always suggest repaying the highest amount you can afford so the debt reduces as quickly as possible however should you need to pay less in certain months then the option is available. You may select to pay less if you need the money somewhere else for example paying higher interest debts.
By repaying debts using this option you can decide which debts incur higher interest and reduce them first. Choose a credit card company that offers an introductory rate of 0% and transfer as much debt as possible allowing you to focus on repaying any other more expensive debts first. This will ensure your debts cost you less as you repay them.
In order to not incur extra charges you should never forget a number of important points when repaying your credit card balance transfer. Most importantly pay at least the minimum figure due on time to the credit card company. Failure to make your minimum payment will most certainly incur additional charges and will probably end your introductory rate which will then make this type of debt very expensive. Always make payments before the due date as late payments will also incur charges and may result in difficulty in obtaining credit in the future. If a late payment is unavoidable telephone your credit card company before the payment is due and explain your reasons for the late payment.
Another guideline you should not forget is to pay the most expensive debts first. If you have other forms of credit that are more expensive concentrate your repayments on these to reduce your overall cost of borrowing. Once you have repaid the most expensive debt move onto the next most expensive and so on until your debt is repaid.
Always remember to always pay the highest amount possible from your balance transfer. The starting balance transfer rate won’t last forever and the sooner you can repay the figure the sooner you can forget about it. Try to not add additional spending to your credit card as these will be charged at a higher rate of interest than the original transfer and it will increase the amount you need to repay.
When you sign up for the card make a note of the time of the introductory period of the balance transfer. As you get closer to the expiry date look around for a new card company to transfer any remaining debt to. Don’t worry if you get rejected for the first one you apply for, there are lots of credit card companies out there offering low introductory balance transfer rates. Once you have arranged a new card, hopefully at 0% interest on balance transfers, move your money from the old card to the new and cut up your old card. You’ll have to pay a small fee for transferring the debt and if the rate is low enough you’ll pay no interest again.
Make sure you define a budget and avoid easy credit for new purchases. If you continue to spend money via easy credit you will eventually face difficult bankruptcy procedures. Depending on the size of your debts it is possible to repay them using this method. Remain positive and avoid any additional spending on credit cards, it may take a while but you will eventually be debt free. I was in debt for several years before successfully using this method to clear my debts and live a live free of debt.
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