How to Consolidate Your Debt With a Credit Card - Slimmer Payments

How to Consolidate Your Debt With a Credit Card

Being in debt can put you on a never-ending cycle of striving to keep up with the payments and interest. The interest can keep you in debt for years if you keep placing more items on credit. One way to get off this wheel is to learn how to consolidate your debt. You can put a considerable amount of debt on a credit card with zero interest for a limited time – helping you to get ahead on your bills.

About Balance Transfer Credit Cards

A credit card that allows you to place existing credit card debt is called a balance transfer credit card. Or, the card may go by another name but still allow you to make balance transfers to it. A balance transfer allows you to add the debt from usually more than one other credit card and consolidate your debt onto a single card. This means you only make one payment a month.

This can be a great way to reduce your debt because if you pay the same amount you were before, that much more is subtracted from your principal. This lets you reduce your debt faster because it is without interest.

Look for Benefit Length

Some credit cards that permit balance transfers will let you have the zero interest for a long time. Others may be as short as three months. The longer periods may let you go interest-free on the balances transferred for up to 18 months.

This Benefit May Not Apply to New Purchases

The same credit card that permits balance transfers will likely also permit you to add new purchases at zero interest. However, the period given for zero interest on new purchases is likely not going to be the same length as on your balance transfers. So, if you plan to add new purchases, be sure to note the difference. Not using it for new purchases will enable you to reduce your debt that much faster.

Amount Permitted to Be Transferred

A balance transfer credit card will often permit you to transfer a limited amount of debt to it when you sign up. However, it could be considerable. This may mean that you will not be able to transfer all of your debt to it.

Watch Out for the Fees and Interest Rates

Many balance transfer credit cards will charge a fee for a percentage of the amount transferred to it. This is usually around three percent average, but some cards will not charge at all. Another potential problem is that there may be an annual fee for the card. The best cards do not charge an annual fee.

It is a good idea to pay down as much of your debt as possible on this card during the zero-interest period. Once that period is over, you will start paying interest on the balance. It can be rather high on some cards – possibly going up to 24%.

How to Get the Best Deal

Like most credit cards, you need to have a good to excellent credit score to get the best balance transfer credit cards. Having a good income to ensure that you can make the payments each month will also help. Remember that the offered interest rate on purchases is not always the interest rate you will actually receive on the card. It depends on your credit score.

Balance transfer cards are the best way to reduce your debt quicker because it eliminates your interest rate for a little while. Learning how to consolidate your debt with a credit card can work for you if you are not deeply in debt.

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