Getting A Low Interest Credit Card for Debt Consolidation
Adrian Fletcher
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.
For people with large debts, a low interest credit card with a balance transfer feature is probably an attractive option. For someone in debt, the major advantage of such a card is to transfer all the debt to the new card. A feature of these cards is a low or zero interest rate for any balance transfers for an introductory period.
With this done, you should be determined to pay of the debts before the balance transfer introductory period is up. In this way, you will save money on interest payments. It will also help you to stay focused on paying off the debt because you know you will save money if you don't hit the deadline. The debt payment will only be once a month too, making it easier to stay organized and not miss payments, as you may do with many cards.
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.
The truth is you don't need a low interest credit card for debt consolidation. You could get a loan instead. This may be a lower interest repayment rate than the credit card. However, if the balance transfer option on the credit card is 0% for six months then you won't find a better deal.
However, it is essential that you can repay the debt within the six month introductory period. Otherwise, you may find that a low interest credit card with balance transfer will not save you money by comparison to a bank loan or an equity withdrawal on your mortgage. the interest rates would not stack up by comparison to these types of loans after six months.
With this said, another reason why a low interest credit card may be appealing is that it would probably be a lot easier to get than a bank loan. Provided you stay focused on clearing your debt a low interest credit card with a balance transfer facility can be an effective way to clear your debts.
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