Getting into debt is easier than you think. But when it comes to coming out of debt, you really have to work hard. Majority of debt problems arise from credit card debt since it carries one of the highest interest rates among all types of consumer debts. Credit card debt is regarded as one of the most detrimental types of credit and hence it’s important to find a way to eliminate credit card debt.
Credit card debt doesn’t have any definite repayment term so the problem goes on for an extensive period. Financial problems are additionally aggravated by the fact that most credit card holders only make the minimum monthly payment. Now how can you eliminate credit card debt? It is best that you do it with a 0% balance transfer card.
Remember that if you only make the minimum monthly payment on your cards, you’ll never become debt free in your whole life. This payment only pays the interest that you owe and not the principal balance.
Credit card issuers extend the repayment term deliberately and allow the consumers to make the minimum monthly payments only to make profit. They make gains from the rising interest rates as a result of late or missed payments.
Using a balance transfer card
If you’ve run up a significant amount of debt on your cards, you can look for a balance transfer card to solve your problems. There are many card issuers that offer balance transfer cards and if you use one such card, you can save a considerable amount on interest payments. You just have to shift the balances of all other cards to that card and pay them at a low interest rate. You might be lucky enough to find a 0% balance transfer card. This low or 0% interest rate is typically available for a specific period known as the introductory period of 12 months. If you can pay off all your balances within that period, then you can save plenty of money on interest payments.
With the current level of competition among card issuers, you have a good chance to qualify for a balance transfer card.
Balance transfer helps you get out of debt faster since a bigger amount of money is directed towards clearing up the principal and not only the interest.
Some important things to remember
While transferring your balances, you should keep in mind the following:
- If you have good credit, you can carry out a transfer every 12 months
You have to make sure that earlier cards are closed since there would be a powerful enticement to spend more money. If you keep your earlier cards active, it might worsen your financial difficulties.
You should lower your credit limit once every quarter on the new card in order to ensure that the balance doesn’t start rising once more. It’s essential that you keep tabs on constant advancement with any type of debt reduction plan.
A 0% balance transfer card is an outstanding means to pay off your other cards and it doesn’t have a negative impact on your credit score.