Eliminating credit card debt is a big challenge as the interest rates accumulate in your balance. Balance transfer cards are some of the most efficient ways to control and deal with credit card debt. A low or 0% introductory interest rate for transferred balances makes balance transfer an excellent way to pay off or work on reducing the principal without worrying about the interest. However, for these cards to yield the best results, one needs to follow specific protocols to the latter.
The following is a step-by-step procedure how to pay off credit card debt.
Evaluate Your Debt Situation
It is wise to evaluate the current situation as a reality check before getting a balance transfer card. Add up your total credit card debt and the interest rates of each card you have. This will assist you in knowing how much in debt you want to transfer and which card is most suitable for the particular transfer. It is essential to know your basic financial facts to choose the perfect balance transfer card and to determine an effective and reasonable budget to pay back the amount.
Research and Select the Right Balance Transfer Card
Balance transfer credit cards are different, so one should try to get one. Balances transferred to low interest balance transfer cards with 0% APR for some time, usually between 12 and 18 months, are ideal. Consider the balance transfer fee; it is normally charged at a flat rate of between 3% to 5% of the balance transferred. Some cards may also come with limited-time no-balance transfer fee offers, although these will cost you some amount from the beginning. Remember that interest rates, mainly the card’s standard APR, will be applied after the introductory offer expires if you still have an outstanding balance.
Apply for the card and transfer your balance
After going through the above steps, it is time to apply for the best balance transfer credit card. They should move their balances from other credit cards to the newly chosen card when approved. Businesses should also consider that the transfer process may take several days to finalize. Pay the minimum amount on your excellent cards when you receive a confirmation on the transfer since some companies may charge penalties. Also, refrain from using the old cards after a balance transfer since this will imply creating new balances, which are counterproductive.
Create a Repayment Plan
Having transferred your balances, it is time to develop a well-laid plan to repay your debts. Determining how much you must pay monthly to clear the debt before the zero-interest offer ends is always best. For example, if you transferred $5,000 of a card with 0% APR for 15 months, you’ll have to pay around $334 monthly to clear the balance. Entering up for automatic repayment is another cluster as it helps to ensure that you remain in accord and make all payments, which could cause you to lose your promotional rate.
Avoid Accumulating More Debt
But when transferring balance, it is important not to incur more balance than you need to transfer. Avoid using the balance transfer credit card for various purchases since most purchases do not attract the 0% APR. Also, do not continue to use your old credit cards, as this adds to the load that you want to free yourself from. Concentration should be made on repaying the existing credit before going for any other credit.
Final Thoughts
It is possible to help those with credit card debt by using a balance transfer card, but success in this method ultimately rests on the proper strategy and subsequent application. By analyzing your debt, choosing the right credit card, moving the balances, making the payment plan, and no new debt accumulation, one can control one’s finances and aim to be free from debts. Low-interest balance transfer cards are the tools that can help a person minimize their debt load, but these tools should be used effectively to make it work.
