Getting A Low Interest Credit Card for Debt Consolidation
Jul 4, 2009 Credit Card
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It may seem slightly odd for someone trying to consolidate debt to get another line of credit. After all, credit cards make it easy and convenient to spend money. This money doesn’t even belong to the person using the card and they can get into more unwanted debt. To a large degree this is true however if used correctly, a low interest credit card for debt consolidation can actually help to solve your financial problems. This article will show you how this can be done.
Credit cards earn a lot of money for banks and financial institutions. They are crucial to the banks success and thus plenty of thought goes into coming up with new products. A credit card with a good repayment rate or a unique incentive may get more people to take the card. A common incentive is air miles for a purchase. This could appeal to many people but most likely to people that do lots of overseas travel - business people for instance.
In terms of people with financial problems the low interest credit card with a balance transfer option is probably the most appealing. The main aim of such a card is to transfer your existing credit card debts to this card. Depending on the card you go for, you will have a period of time where you don’t have to pay interest on the transferred debt.
Once this is done, the sole focus should be to try and clear this debt before the balance transfer introductory period is over. This means you will save on interest payments and the prospect of saving money will motivate you to clear the debt. A beneficial by-product of doing this is that the payment will be once a month, making it easier to manage, rather than having to pay numerous cards throughout the month.
This method will only work if you actively work to pay off the debt and stick to this plan without having a credit splurge. Many people think that putting the transferred balance on a six month interest free period means they don’t have to worry about it. This is not the right attitude and in six months the repayments will be causing plenty of concern.
So in reality, you don’t really need a low interest credit card for debt consolidation. You could try to get some other form of credit, like a bank loan instead. A bank loan will probably have a lower repayment rate than a credit card. However it is unlikely to have a 0% repayment rate for the first six months.
However, you have to pay off the debt within the six months or you probably won’t be better off. This is something you have to work out before you decide to get the card. Commit to paying off the debt and you will be better. If you think it will take 12 months to pay off the debt then it may be better to go for another option with a lower interest rate.
Even if this is the case, getting a low interest credit card could be far easier than getting a bank loan. It may be a speedier and cheaper option in terms of the application too. Indeed, provided you stick to your goal of clearing your consolidated debt within the time period allocated, a low interest credit card with balance transfer could save you money and get you out of debt faster.
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Tags: Credit Card, Credit Card Debt, Debt, Debt Consolidation, debt cures, money
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