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Article Series: Debt
Relief & Debt Consolidation
I Want To Get Rid
Of My Debt...NOW!
Transfering
Balances When Consolidating Debt
You have opened your recent credit card statement
and thought that just before you ripped the envelope open you
could hear a drum roll. Yes, you were perhaps a day or two
late on a few of the payments, and now the credit card company
has exercised its option to raise your rate. You may be looking
at a whopping twenty-five percent interest rate, and if your
balance is right around $10,000, your finance charges are sure
adding up. Add to this the late fees, and an assortment of
other fees and charges, and it appears like you are going backwards
every month, instead of forwards.
Perhaps
you have decided to consolidate your debt. This is
a great idea, and the goal is to do so at a lower interest
rate. Yet maybe you have decided to go ahead and consolidate
your credit card debts onto another credit card, which has
a lower interest rate. This is commonly referred to as playing
the transfer balance game when consolidating debts.
Depending on your creditworthiness, you probably receive offers
for zero percent interest credit cards. These cards will have
a low introductory rate for a few months, and then the interest
rate will go up to its normal rate. The goal is to get out
from under the thumb of those high interest rates and move
balances over to a card with a low interest rate.
There are a number of ways to go about accomplishing this. If
you have not yet maxed out all of your credit cards, you
may want to go ahead and call your creditor to see if they
will give you a preferred rate on a balance transfer. Oftentimes
your credit card company will agree to this since this means
that there is a good chance that you may not pay off the balance
before the rate reverts to the normal interest rate. Since
all this can be accomplished by a quick and oftentimes free
phone call, it is worth the effort to do so.
If
your credit cards are maxed out, or if your credit card
company does not want to work with you, you may have to go
ahead and apply for a new credit card. Watch your mail for
the infamous zero interest rates offers. These teaser rates
may sometimes only last for one month, or sometimes they may
last as long as three or six months. Be sure to read the fine
print before applying and transferring a balance! Will you
be able to live with the regular interest rate once the teaser
rate has elapsed?
To make sure that you are comparing apples to apples when
shopping around for your new credit card, make sure
that you read the fine print diligently. You will want to find out if
the balance transfer falls under the low teaser rate, or if
instead it will be treated as a cash advance, which usually
is accompanied by stiff fees and a slightly higher percentage
rate. Make sure that you still come out ahead! If the wording
is a bit murky, or you are not complete sure what the fees
will be, go ahead and call the credit card company and ask
them to send you their policies on cash advances and balance
transfers. Oftentimes these disclosures will also be available
on the card company’s website.
Those who have mastered the transfer balance game - and elevated
it to an art form – suggest taking advantage of the grace period.
Usually there is a twenty-five day grace period on outstanding
balances. If the balance is not paid in full at that point,
you will incur an interest charge. If you have two or three
credit cards with good deals on balance transfers, you should
be able to transfer the same balance round and round without
incurring interest or making a payment.
Of course, this will only work in the very short term. For
a long-term solution, resolve to stop using your credit cards,
and pay more than just the bare minimum. Instead, pay the amounts
of any charges you made during that month plus interest charged
plus a bit of the principal to reduce your overall debt.
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SolveYourProblem.com
: 2007
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