When you are in need of a large amount of cash to eliminate the debts that are making it hard to live from one paycheck to the next, you may be considering how credit cards can work to your advantage. Many consumers will immediately dismiss credit cards as a way to resolve debt problems and there is good reason for that. But with the right plan, a balance transfer credit card can help you pay off your debts for good.
Making the Transfer Work For You
There are many available balance transfer credit cards designed to help you eliminate your bills. It is all about how you use these cards in relationship to your debts that matter. Here are some tips for making a balance transfer work for you:
Get Your Credit In Order
If you are considering applying for a balance transfer card, you need to first ensure you are credit worthy to get approval for the card. You can access your credit report and score from the credit reporting agencies and see where you stand. If you have been having a tough time meeting your financial obligations, your credit score may suffered and you may not get approved for the card you want.
Gather Your Debts
If you plan to eliminate your debts, you first need to understand how much you owe. Collect all your billing statements from creditors and find out the total amount of debt you have. Prioritize which debts you will pay off with the 0% APR balance transfer so you’ll know what to do when you get your card.
Find the Right Card for You
In order to effectively use a credit card to eliminate your debts, you will need to find a card that offers the credit limits you need with terms and conditions you can abide by. Compare several cards before committing to one card.
Have a Plan
This is the essence of using a balance transfer credit card to eliminate your debts. If you do not have a plan to pay off your new credit card balance, your efforts will backfire and you could end up having more debt than you started with. Your plan should include the means to pay off the debts you have accrued before the low balance transfer rate expires. Otherwise, fees and interest will add to your debts. If you cannot come up with a plan to have your balances paid off in full before the promotional period ends, a balance transfer card may not be the right option for debt elimination.
The Downside to Transfers
Balance transfers can be an effective method for eliminating debts and freeing up monthly money. In order to make it work for you, you have to have a plan in place long before applying for a credit card. If you do not go into the situation prepared, you will end up with higher debts and more financial trouble than you started with. You will also be risking your credit score by keeping a credit card you cannot afford to pay off. A bad credit score affects not only your ability to get credit in the future, it can also cost you more money in insurance premiums and utility services.
Use a credit card wisely and you’ll have great results. Use a credit card impulsively and debts will likely remain on your financial records for a decade to come.