There is a way to pay off your existing credit card debt using a credit card, which I will be writing about in this article. This trick needs strict discipline on your end as it may back fire and put you even in deeper debt if you don’t do this right. This ‘trick’ involves taking advantage of transferring all of your credit card balance to one single credit card which offers no fees or 0% interest rate.
This is called balance transfers. When you are thinking of transferring a balance of your debt, usually from a credit card or a bank loan, you need to make sure that the credit card you are going to transfer the balance to has a very low interest rate if not completely 0%. The card that will be receiving the balance may have an interest rate for a certain term. It is usually 6 months but it can be as long as 9 months or even a year.
You need to understand that opening a new credit card with 0% interest rate is not a green light for you to spend even more. As I said earlier, this trick can help you pay off your debt but it can also drag you deeper in it if you do not have the discipline it takes. To make sure that you are not spending more money now that you have more credit cards in your hand, transfer the all of your balance from all your credit cards to the new one with no interest. When it is done, cut off your old cards so you will not be able to use it anymore and put the new card into a safe place with a lock. When you go out and shopping, the card will be safe at home and not in your purse or wallet.
Now your focus should only be on paying the only bill that you have now on your single card. It is important for you to plan before doing this balance transfer. Shop around first to find the best credit card deals that you can get. Find websites or other sources that provides a good credit card review to help you get the best deal. Find deals and offers of balance transfer credit cards and compare each product. When you have found a good deal, find out the length of the 0% interest rate offer period. Make sure that you can afford to pay off most of the transferred balance if not completely within the offer period.
Here are a questions you need to ask before applying for a balance transfer credit card:
- Find out the length of offer period.
- How much is the interest rate? It should be lower than any of the credit cards that you already have.
- Is it possible to transfer the balance from loans and overdrafts?
- What are the hidden charges?
- Are there any handling fees on the balance transfer?
- Is there a cut off point from the account opening when the offer is no longer valid? How high is the interest rate when the offer period ends? Make sure it is not higher than any of the credit cards that you have already!
- Is there also a 0% interest rate on new purchases? Even if there is, you should still lock up your credit card and not bring it with you anywhere you go.
You also need to be aware that at the end of the offer period, lenders hope that the cardholder will retain the card and some of the debt. This way they can then start charging interest and making some money!
If you still have remaining debt in the balance transfer credit card at the end of the offer period, you can try and follow what some people do. 6-8 weeks before the end of the period, some credit card holder switch to another balance transfer credit card again and close the previous account. This way they can continue paying off their remaining balance on a 0% interest rate again before the previous lender charges you with a higher rate. But you still need to be highly organized and discipline to make this work. People who regularly switch balances are known as card tarts.
Another main important thing is that you make your regular payment. Missing one payment means penalty. So be aware.
Popularity: 3% [?]
Add A Comment