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Want to consolidate credit cards? Check out balance transfer method!

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By: Good Nelly
on 27th Jul,2015

You can consolidate high interest credit card debt with balance transfer method. Check out its benefits and do’s and don’ts to repay bills by this met
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Is it being difficult for you to manage your multiple credit card bills? Are you forgetting the due dates of your multiple payments and want to repay the high interest rate balances? If you're in this situation, you can decide to consolidate your credit card bills. Go through this article to know how to consolidate credit card debt with balance transfer method.

How to consolidate debt with balance transfer method

Balance transfer method is a way to consolidate your credit card debt. In this method, you transfer your high interest credit card debts to a card with lowest or relatively lower rate of interest. However, you may need your creditors' approval to opt for balance transfer to consolidate your credit card bills and pay them off. By doing so, you can pay off the outstanding balance on your credit card at a comparatively lower interest rate. Moreover, you can repay all your credit cards just by making a single payment every month.

But, have you reached the maximum credit limit on your lowest interest card? If yes, then you can take out a new balance transfer card. The credit card companies offer such cards with an introductory offer of a low interest rate. You should repay the entire balance, which you transfer to this card, within the introductory low rate of interest period.

Advantages of consolidating credit card debt with this method

The advantages of opting for balance transfer method to consolidate credit card debt are given below:

  • You can repay debts at lower interest rate
  • Pay off your multiple bills through single monthly payments
  • You can manage your finances better
  • Your credit score may improve after paying off the entire balance
  • You can become stress free since you need to remember one single payment date of credit card

Do's and dont's

You can follow these do's and don'ts while opting for balance transfer method to successfully repay your credit card balance.

Do's:

  • Check the introductory period - It is very important to check the introductory low interest rate period if you're taking out a balance transfer card for the purpose of consolidation. This is because, you may have to pay off the remaining balance at a significantly higher interest rate, once the introductory period is over.
  • Plan a budget to save more - It is quite important that you plan a suitable budget and try to save more every month. You can use this money towards paying off your outstanding credit card balance. The faster you pay the balance amount, the more you'll be able to save money and be stress free.

Don'ts:

  • Spend lavishly - Don't start spending lavishly after opting for balance transfer method. It is advisable to not use your credit cards until you clear your dues completely. Otherwise, you'll not be able to come out of the debt loop. And, most importantly, try to repay the outstanding balance as fast as you can.
  • Close your old credit cards - After transferring your balance, you may decide to close some of your credit cards with high interest rates. However, before doing so, check out whether or not it's your oldest or one of your old credit cards. Closing the oldest credit card will lower your credit history. In turn, this may lower your credit score too. This is because your credit history is one of the major points of consideration of your credit score calculation.

Also, check out the pros and cons of opting for balance transfer method to solve your credit card debt problems.

Other methods to consolidate credit card debt

Here are 2 other methods of credit card debt consolidation:

  • Consolidation program - By enrolling in a consolidation program, you can repay your multiple bills just by making an agreed upon single monthly payment to the consolidation company. A representative of the company negotiates with your creditors to reduce the interest rates. He/she also disburses the monthly payment, which you make, to your creditors as per agreement.
  • Consolidation loan - A consolidation loan is like taking out a personal loan with which you pay off your existing credit card bills. Thus, here also, you substitute your multiple payments with a single payment every month. You make this single payment to repay your new consolidation loan.

Once you're successful in paying back your entire credit card balance, use the credit cards responsibly. It will help you improve your credit score and enjoy a better lifestyle.

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