This article explains how to use credit cards with balance transfers to help you get out of debt.
Balance transfer credit cards can be a great way to get rid of a lot of debt at once. Many Americans are in debt right now and are having a hard time getting out. Some people choose to use a home equity loan to help them get out of debt, but not everyone has built up enough equity in their home to do this. Also, putting your house up as collateral for debt consolidation can be a little scary, and many banks will charge you fees and fines if you try to close the equity line before a certain time.
Rates of interest going up
Anyone who has had a credit card for a while or who follows the financial market knows that the rates on many credit cards have been going up. When the prime rate goes up, credit card companies are usually happy to raise interest rates, but when the prime rate goes down, they aren't as quick to lower rates. By using a balance transfer credit card to consolidate your debt, you can move your debt from cards with high interest rates to a card with a lower interest rate. The best balance transfer credit cards have low introductory rates or low fixed rates on balance transfers. This makes them a great way to consolidate debt.
Where to Look
When looking for a balance transfer card to help you pay off your debt, you should usually look for the card with the lowest long-term rate. You probably won't be able to pay off the debt you're consolidating in a short amount of time. If this is the case, your low-interest period may end before you have paid off all of your debt.
You should also be careful about fees if you want to use a balance transfer credit card to pay off debt. When you move a balance from one credit card to another, many credit cards charge a fee. The best credit cards for transferring a balance won't charge you anything extra. Also, some credit cards that let you transfer balances require that you ask for the transfer when you apply for the card in order to get the special introductory offer. This might be fine for some people, but you might want to be able to move balances around. In this case, you should choose a card that lets you move balances at any time during the introductory period.
For the best balance transfer credit cards, you should look for ones that keep the low APR for as long as you have a balance on the card. In other words, a balance you transfer to a credit card might have an APR of 0% for the first six months, but it might jump to 19.99% after that. On the best balance transfer credit cards, however, the low introductory rate stays in place until you pay off the whole amount you transferred.
Self-Discipline
A balance transfer credit card can't do everything for you, that much is clear. Even though you can put all of your bills on one card, you'll have to be responsible enough to pay off the balance. If your introductory period ends after a certain number of months, you should make a budget that will allow you to pay off the balance before the period ends. To make a little extra cash, you might have to give up some extras, like the cup of fancy coffee you buy every morning. When you are out of debt, it will be well worth it. Also, you should put the money you save on finance charges toward your credit card debt.
