by Jeff
16. August 2011 03:59
Credit card nowadays are more of a commodity than something to be feared off because of the possibility of debt. So the usual goes, people get to shop, dine, swipe their cards and the next thing you know bills start to pile up one by one. Once you’re in that situation that you get a big bulk of debt on several of your cards, interest charges will take it’s toll especially the high ones on royalty cards. Luckily there’s credit card balance transfer and it’s really beneficial to people with several cards over their limits. This may just save you from insurmountable debt and sleepless nights trying to figure out how to pay them all.
The idea behind it is to transfer your balances from one card to the other card which has a lower interest rate. If you happen to have several cards then chances are these have different interest rates, one would be lower by a couple than the rest. Rather than pay off your debt individually it would be a good idea to have them consolidated into one card that has the lowest interest rate saving you by a couple of dollars from the typical interest surcharges. This is typically advantageous to people who have several cards that have balances on them.
Transferring balances of course has it’s charges typically around 1-5% of the total balance transferred. This is the premium with which the bank charges for receiving the bulk of the debt carried over. But then, compared to paying the high interest charges of your other cards on top of your actual debt it won’t be a bad deal to pay the one time transfer charge and take advantage of the lower interest rate when paying off your debt. Another thing to look at before hand is understanding interest rates on cards especially those that claim zero percent interest as this is were most people get lured and trapped.
At times it would take ages to pay off credit card debt after it has reached to a point where the amounts are way off and for someone trying to make a living from the usual 8-5 job with a family sometimes your income is barely enough to make a living, let alone pay debt. It would also help to inquire with your financial institution about what options you have to leverage your position when it comes to your debt.
Doing a credit card balance transfer is of course, just one solution to leveling credit card debt, but at times is not enough as certain cards are only able to handle up to a certain level of debt. Consulting with a debt advisor would also be helpful in situation where balance transfer is not enough.