Reducing Your Debt with Balance Transfer Credit Cards
There are many credit cards that are offering excellent rates on balance transfers. It is important to understand all of the fine print that is involved with these offers. While low rate balance transfers will help you reduce your debt more quickly, if you do not understand all of the fees involved, they can end up costing you more in the long run.
There are several steps that you can go through in order to find the best balance transfer deal for you. Knowing your credit score and the amount of debt you have is the first place to begin. By knowing your credit score, you will be able to apply for the best rates possible on the most appealing cards. If your credit report is not as clean as you would like, it is worth it to contact a consumer debt counseling service in order to gain advice on how to make the report better, giving you a higher score. The higher the score, the better credit card and mortgage offers you will receive.
Be aware of how long it is going to take you to pay off your debt. When working your budget, know the amount that is available to put solely towards credit cards per month. Most 0% balance transfer offers are from 6 to 12 months. If it will take you longer than this to pay back the debt, you may have to consider switching your balance more than once. This is an option, although having many credit lines can adversely affect your credit. Some credit cards in Australia will offer a lifetime balance transfer offer. While this offer is generally not 0%, it may be worth paying the low percentage rate to know your exact payments each month. Then, you will not have to worry about switching in time to avoid additional fees.
Once you have your balance transfers sorted, make sure to know how the payment structures on the cards work. As a general rule, you should not purchase items on the credit card that you have a balance transfer on. Any purchases you make will most likely be charged at a much higher rate. The payments you make will be used to pay down the lowest interest rate first, meaning the purchases will be compounding interest until your balance transfer is paid off. The interest fees alone may negate the positive financial impact of the balance transfer.
If you are interested in obtaining a balance transfer, consider all of the financial implications involved. Balance transfers are an excellent way to pay down your debt, but they can often end up being a very costly endeavor if not managed appropriately. Many websites on the internet will have a listing of credit card companies with the best rates available for their different cards. Remember that those rates are often times for those with superior credit, so it is important to begin the balance transfer process by checking and cleaning up your credit report.