Currently, joining debts with a credit card that has 0% balance transfer is a way costumers find effective in dealing with several credit problems. Before consolidating debts, it is vital you are familiar with the changes and benefits you will receive after uniting the two. This method is mainly used to join the credit card balance, which results in benefitting the customer with a simpler payment plan. If other debts are all combined under one card, it will make things much easier for the customer when it comes to monitoring and sticking to monthly payments.
Before consolidating debts you will need to purchase a new credit card, which offers a 0% interest on the credit card balances that will be shifted to them. The initial rate will run from a few months to over a year. In this time, customers pay their debts and if any balance is carried over to the next month, it will not increase money charges.
Last February 2013, a study was carried out by CardHub.com, and resulted in saying a program on balance transfer can help customers save $1,000 on charges and fees. If customers can control their finances well, then they may even be able to get out of debt during the early period of their new card. The interest set at 0% is powerful help and can even help customers so save money.
What to Achieve Before Consolidating Debts
No matter how good the balance transmission is, it is vital for customers to approach it the right way. When it comes to using balance transfers, there are many pros and cons involved. These are what you need to know before consolidating debts. In order to minimize any risks/disadvantages, this is what you can do:
- Ensure you are familiar with the terms before consolidating debts. These will be printed over the card for you to read. Different card companies have many offers, and some may not accept transfers from store cards. You need to do all you can from your side and make sure you select the correct card before consolidating debts.
- Only make arrangements for the transfer fee that you need to pay. Before consolidating debts you will need to pay a fee, which will be covering the transfer of the payment to the new card. The rate is usually 3%, but some providers hold a rate of 5%.
- Before consolidating debts, you will get to know about the 0%. What you need to find out is what this covers. Providers cover various aspects and you need to ensure you know which your issuer covers.
- Ask enough questions before consolidating debts. If you know everything from the start, you will always know what to expect as well as the rates throughout the process.
- Reading reviews before consolidating debts is also a good idea. Obviously some are better than others and you will only know after reading some reviews.
Following the top five points before consolidating debts will help you make a smart choice.
Significant Prompts when Transferring Debts into a New Card
You know what to do before consolidating debts and it is important you are also familiar with a couple of reminders:
- Give your payment plan a budget – the overall goal of this transfer is to both combine your debts, but to also pay of any debt within the 0% promo period.
- Don’t use the credit card for a fresh purchase. This is to keep the balance low whilst paying off your recent debt.
- Stay strict. Make sure you are early with the whole process, as being late may show you are not interested, and in return the promo could end quickly.
- Keep an eye out for when the promo ends. This way you will know when the ending date is near and you will have enough time to put in as much money as you can into your account.
Two More Consolidating Debts Options
Before consolidating debts, it is vital you are also aware of the two other options that you could choose from:
- This can be used for any type of debt.
- This debt program helps to decrease monthly payments.
- It does this by increasing the payment length of the original credit.
- Customers borrow a loan that is on low interest – this is what is used to pay off the various debts they owe.
- This option involves a loan counselor who helps in organizing a debt managing strategy.
- It holds the longer payment term for the customer.
- The customer only has to make little contribution – monthly.
- A low interest on debt will also be exchanged by the credit counselor.
- The customer makes a payment towards the credit counselor, who then issues the amount to other creditors as well as the debt managing strategy.