How to Use Balance Transfers to Eliminate Credit Card Debt for Good

This article was written by Jason Bushey. Jason is the Vice President of Creditnet.com.

Listening to NPR on my way into work yesterday, I heard a a pretty astounding bit of news.

According to a recent report by the credit agency TransUnion, the average American?s credit debt rose nearly 5% from the same time last year to a shade under $5,000. That?s right ? the average American owes creditors close to five grand, and delinquent payments were up a smidge from last year, too. (0.04%)

Believe it or not, analysts actually think this is a good thing for consumer confidence and the economy overall since spending is on the rise. However, it?s certainly not a good thing for individual consumers who are facing some serious debt and snowballing interest rates.

Before you get bogged down by interest rates as you attempt to pay back your credit debt (and especially if you?re at this point already), you should consider transferring your balance to a 0% interest balance transfer credit card.

If you?re not sure what a balance transfer credit card? is or how they work, the idea is simple: Stop paying interest on your credit card bill by transferring your credit debt to a new card offering 0% interest on balance transfers during its intro promotion period.

Think about it ? consumers pay anywhere from 9.99% to 29.99% on interest each month. If you?re the average consumer that owes $5,000 in debt and you?re paying 15% interest, that is $750 in interest alone!

We probably don?t need to convince you what your next move should be?

So now that we have your attention, here?s what you need to do to transfer your balance and save in three simple steps:

1. Devise a plan

The first thing you should do is determine how many months it will take you to pay back your credit card debt at 0% interest. Remember to use realistic monthly payments as the benchmark, that way you can come up with an accurate timeline for paying back your credit.

For example, if you?re sure you can pay $100 a month each month and you owe $1,000, then it will take you 10 months to pay back your credit card debt. Once you get your strategy in order, the next thing to do is choose your card.

2. Pick the right balance transfer credit card

Now that you?re armed with your payment plan, you?ll know what to look for in a balance transfer credit card. If it?s going to take you 10 months to pay back your credit debt, then you need to find a balance transfer card that has a promotion period of at least 10 months. (And to be safe, we would maybe tack on a month or two just in case you fall behind.)

In general, intro periods can last anywhere from three to 18 months depending on the credit card. If you?ve calculated that it?s going to take you a while to pay back your debt, then of course we would recommend applying for credit cards with the longest intro periods. A credit card with an 18 month intro period (for example, the Citi Simplicity? Card) is recommended for such a consumer.

Also ? and this is important ? make sure the balance transfer credit card you?re interested in includes transfers in their 0% APR intro period! While many credit cards offers no interest on card transfers, fewer include them in their intro period. So, before you submit that credit card application, read the fine print and confirm that you won?t pay any interest on your balance transfer.

3. Transfer your balance as soon as you receive your new card

Introductory promotion periods are, obviously, temporary. Make your credit card transfer as soon as you can to get the most out of your 0% intro period. That way, you can stop paying interest and start paying back your credit debt directly from the get-go with your new balance transfer credit card.

Any month you can skip interest fees means more money in your wallet, so there?s no reason to wait. And since it?s the holidays, any additional cash can be really helpful. Just try not go too wild this holiday shopping season.

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

Related posts:

1. Balance Transfers and Credit Card Debt
2. Credit Card Debt Strategy ? Snowball or High Interest?
3. Credit Card Debt Rises in December ? What a Shocker!
4. New Credit Card Rules and What They Mean
5. Credit Card Rates Soar to New Heights

Tagged as: balance transfer, Citigroup, credit card, credit card debt, debt, interest rate, TransUnion

Source: http://blog.checkadvantage.com/2012/11/26/how-to-use-balance-transfers/

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