Credit card balance transfers can be used legally as a way to repay debt. One of the major advantages of selecting 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 apply as long as the debt is repaid or transferred elsewhere before the introductory period ends.
Another significant advantage of using this solution is you can vary the amount repaid each month to suit your budget. You should always try to repay the maximum you can afford to lower the debt as quickly as possible however should you choose to pay less in certain months then you can do so. You may choose to reduce your payments if you need the money elsewhere for example.
You should attempt to sort your debts to repay the most expensive debt first. You should be able to choose a credit card company offering a 0% introductory rate and transfer as much of your debt as possible to it. You can then concentrate on repaying your more expensive debts first ensuring you pay less in the longer term.
There are some important points to remember if you decide to repay debt using a credit card balance transfer. Most importantly remember to always make at least the minimum payment on time to the credit card company. If you fail to do this you will most likely incur additional charges and possibly lose your introductory rate making your debt very expensive. Additionally late payments may result in increased difficulty obtaining credit in the future. If a late payment is unavoidable contact the card company as soon as possible and tell them any reasons why.
Another important guideline is to prioritize your highest interest debts first. If you have other credit at a higher rate of interest then it is more expensive you should reduce this first to reduce the overall amount you repay. After you have repaid higher interest credit then move onto the next most expensive and so on until your debt is repaid.
Try to repay as much as you possibly can from your credit card balance transfer. The introductory rate on the credit card transfer will not last forever and the quicker you reduce the balance the sooner you can forget about it. Try not to add additional spending to the balance transfer as this incurs higher interest charges than the original debt and will not be repaid first.
When you sign up for the credit card make a note of the length of the introductory period of the balance transfer. As you approach the expiry date look around for a new credit card to transfer any remaining debt to. Don’t worry if you get turned down for the first one you apply for, there are lots of card companies out there offering introductory balance transfer rates. Once you have your new card, hopefully at 0% interest on balance transfers, transfer your money from the old card to the new and destroy 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.
Try to make sure that you live within your budget and do not use easy credit to purchase items. Any money spent on credit cards will eventually have to be repaid or you’ll face difficult bankruptcy procedures that may affect your credit rating for years. It is possible to remove all your debts using this method, dependant on the size of your debts and the amounts you can afford to repay each month. It may take a long time but you will eventually be free of debt. I was in debt for several thousand pounds and used this method to pay off my debts and now live a debt free and happier life.
Tags: Balance Transfer, balance transfers, banking, Credit cards, debt, Finance, introductory rates, reduce debt, savings