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Credit Card Balance Transfers: 4 Interesting Pros And Cons

Credit Card Balance Transfers: 4 Interesting Pros And Cons

credit card balance transfersCredit card balance transfers are becoming increasingly popular among consumers who are paying high interest rates on their credit card balances. Some consumers also choose to make credit card balance transfers for the purpose of lowering or eliminating their debt.

What are credit card balance transfers?

A credit card balance transfer is a popular debt management technique used to eliminate or reduce card debts. It is an effective tool that helps you manage your debt more effectively by transferring your outstanding balances to a lower interest rate account and also gives you more time to pay down your outstanding balance.

A balance transfer usually involves moving current outstanding debt from one credit card to a different credit card usually a lower interest rate account. Consumers usually use credit card balance transfers either to secure a better interest rate or to benefit from a variety of rewards programs available at some credit card companies.

The key advantage of credit card balance transfers is that they can save you money. A credit card with a zero percent introductory interest rate and no balance transfer fees will save you in interest payments over the term of the loan. In addition, it may give you a tax break. These benefits are important reasons why consumers use these kinds of debt-management tools.

Can a balance transfer really help with debt management?

However, there are disadvantages associated with credit card balance transfers. You may end up paying more than you would if you had not transferred your balance. Generally, balance transfers have a fairly short term effect on the total amount you are paying monthly. After your introductory interest rates are ended, your payment will then start Credit Card Escapeto increase. If you continue to be an active user after the introductory period, the cost of credit card debt will continue to increase. You can avoid this by simply transferring your debt into a lower interest saving account before the introductory period ends.

3 interesting pros for you to consider

There are many pros and cons of credit card balance transfers that you should consider carefully before making a decision. One of the pros is that you will save money each month by paying less interest. In addition, you will likely receive a variety of reward programs, including air miles, cash back, or other prizes. This can save you quite a bit of money if you make a large purchase during the promotional period.

Another pro is that transferring your balances to a low or new credit card offers a way for you to consolidate your debt. If you were having many different credit cards and a lot of late or missed payments, this is probably a good option for you. This helps you avoid paying high interest fees and penalties and lowers your overall debt load.

Yet another pro for a credit card balance transfer is that you do not have to take all of the cash that you are earning. With a cash-back or reward program, some of your cash may be going to paying off higher interest debts, but the majority of it will go to reducing your debt. You don’t have to pay off your entire debt during the promotional period, but transferring your debt makes sense. After all, if you are saving money, why not spend it?

Are There Any Risks?Credit Card Escape

Here’s a con to credit card balance transfers: Most people find that they have to cancel their old cards or stop making new purchases during the introductory period.

If you don’t have to worry about this, then a transfer is probably not worth it for you. Remember, you can always transfer your balance at any time, even when the promotional rate is ending, so you don’t have to cancel. However, you might need to start paying more interest during the second half of the introductory period if you choose to transfer.

Credit card balance transfers are helpful for many people. However, there are risks involved. If you choose the wrong balance transfer offer and don’t pay attention to the details, you could end up losing money. Make sure that you do your research and understand how credit card companies work. Then, you’ll be able to determine if a balance transfer is right for you.

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4 Best Ways To Do Debt Consolidation And Reduce Your Debt Payments

4 Best Ways To Do Debt Consolidation And Reduce Your Debt Payments

Is it better to consolidate credit card debt yourself or seek the services of a debt consolidation company? Learn how to reduce your monthly debt payments.

Advantages of Debt Consolidation

The advantages? Debt consolidation firms argue that borrowing cash at a better interest rate than to pay debts off with your own credit card at a better interest rate can save you money over the long term, or save you money in the short term by helping you better manage your finances. Other advantages include: having fewer late payments, having more affordable monthly payments, and fewer chances that you will be late on a payment.

Disadvantages of Debt Consolidation

Does debt consolidation loans have disadvantages? Consolidation loans come with a variety of disadvantages. The main disadvantage is that the longer you go with high monthly payments, the greater your chance of defaulting. This can be a substantial loss to your credit score, which may affect future purchases. Consolidation loans are typically not meant to last forever because they often have an early pay out penalties.

can you consolidate credit card debt

How to Reduce Monthly Debt Payments

What are the best ways to lower your monthly payments while still paying off your debts?

  • Get a Debt Consolidation Loan

One of the best options is to get a debt consolidation loan from a debt settlement firm. Debt settlement firms can help

you settle your credit card debt for a fraction of the current amount owed. Because unsecured loans carry variable rates of interest, the amount that they settle for is also variable. It is a balancing act between satisfying the customer and getting enough money settled so as not to default. To do this, many firms will negotiate with creditors on behalf of their customers.

  • Bankruptcy Process

Another option is a bankruptcy process. A bankruptcy can wipe out a large portion of your debt relief potential but it is important to realize that this route is very time consuming and expensive. For most people, a much better way to debt consolidationget debt relief is to use the help of a debt settlement firm in a bankruptcy or debt relief plan rather than file for bankruptcy.

  • Refinance Your Mortgage

A third option is debt consolidation through a refinance of your mortgage. Many people cannot qualify for a refinance on their own. Banks usually require at least some equity to qualify. Using a refinance can lower your monthly payments but it can also increase your interest rate. It is best to find a mortgage broker to help you find a mortgage that offers the best deal.

You may also be able to lower your payments by working with your creditors. Some lenders offer incentive programs for people who can consolidate their credit card balances into one account. These programs are designed to help those with multiple accounts work with their lenders to lower their interest rates. This allows you to payoff all of your debts at once which will save you a lot of time and money. Most lenders will approve a debt consolidation loan, but they will charge a high interest rate as well.

  • Debt Management Plan

There are also companies that offer debt management plans to those who are unable or unwilling to consolidate. These plans allow you to transfer balances between several credit cards to a debt consolidation company that will pay them off for you. You can use the savings from the new company to make extra payments and lower your overall debt balance. This can reduce the stress of having to manage several debts but it can take several years to work through all of your accounts.

No matter what option you choose you should know that the best way to settle your current obligations is to contact your credit cards companies and negotiate a settlement. With each creditor you owe money, there is a process that must be followed to settle the account. It is best to hire an attorney so that they can give you the best advice possible. It may cost a little bit of money but the alternative to using debt settlement is bankruptcy and you do not want to ruin your credit rating or end up in jail.

Posted by Mary Draper on

5 Simple Ways To Use Credit Cards Efficiently And Avoid Debt

5 Simple Ways To Use Credit Cards Efficiently And Avoid Debt

Lock, Security, Credit Card, Infographic

The isolation that we are forced to respect to avoid the spread of Covid-19 has altered our day to day and, above all, our finances. Household income has been affected, while living expenses have been increasing.

Whether you’re out of work or on hiatus from the pandemic, a credit card can be a very useful tool for resolving emergencies. But how can we avoid getting out of control and ending up full of debt?

Here are some recommendations to keep in mind when buying with your credit cards during a crisis.

Check your credit cards

First of all, check which cards you are using and what they might be useful for in the midst of the crisis. Credit cards are a great tool right now and allow you to buy now and pay later what you need to survive and face any medical emergency that may arise. But, if possible, use the one that offers you the most benefits and dispense with the others. This way, you will avoid accumulating debt.

Buy the essentials

At this time, consumption should be limited to the most essential. Food and health care are priorities. We must onlycredit card spend on food, medicines if we need them, and on our health service. Other types of expenses are totally unnecessary in these circumstances. In addition, we recommend that you fill your pantry and your refrigerator in advance and in a responsible way, so you will be prevented in case of shortages.

Make sure of your ability to avoid debt

A credit card does not add more money to your income. What you buy with it you must pay sooner or later, so you must be sure of up how much you can pay monthly. The most advisable thing is that you do not spend more than 30% of your income. This way, you do not compromise the budget that you have destined for your basic expenses such as food, rent or utilities.

Ask for the interest rate

Laptop, Credit Card, Infographic, 3DEither by phone or online, ask for the interest rate on your credit card, which in other words, is the cost of your credit. Since the amount, you must pay increases directly according to the interest rate. If you see that later on, it will be difficult to pay the debt, it is recommended that you look for a card that offers you a lower interest rate.

Use the card after the court date

When you use the credit card after the cut-off date, you have approximately fifty days to pay. This date is assigned by the bank after adding all the expenses you had in the month. In this way, you can take advantage of all that time to save and pay in time.

Without a doubt, credit cards are a very useful alternative in these times of crisis and mandatory isolation. If you take into account these recommendations, especially planning what you are going to buy, pay your debts on time and know how much you are willing to pay, you can take advantage of the benefits that credit cards bring.

Posted by Mary Draper on

Eliminate Credit Card Debt With This 3 Effective Debt Payment Strategies

Eliminate Credit Card Debt With This 3 Effective Debt Payment Strategies

Credit Card EscapeAre you drowning in credit card debt?

Although my first formal job was as a credit card salesperson, and I knew exactly how they work, I quickly got caught up in them. I came to think that it was normal to have debts and that the only way to have something was to buy on credit.

Once we have recognized that we have a problem and decided to fix it, the next step is to know the exact financial condition we are in before proceeding to debt repayment. For this, we must make a complete list of all the debts we have, both legal (signed in contracts) and honorable (loans to family and friends made with our word).

This list of credit card debts must include all possible information, at least:

  • To whom is owed (name of institution)
  • The total amount owed from each
  • Minimum monthly payment
  • Annual interest rate
  • Contact person.

Create an action planCredit Card Escape

When we have the complete list of debts on paper, it is necessary to implement an action plan that allows you to take steps to get out of debt. This action plan is made up of no more debt. Otherwise, all other efforts will be useless.

Generate surpluses to be used for debt payment; some ways are:

  • Minimize expenses. The higher the commitments, the stricter you must be in spending money.
  • Increase income with secondary jobs, overtime, etc.
  • Sell ​​assets that can speed up our debt payment process.

Make the credit card debt payment plan as follows:

  • The list of debts order it from the lowest debt to the highest
  • Negotiate with creditors to have the lowest monthly payments.
  • Credit Card EscapePay the monthly minimum of all debts and the surplus we have generated and pay it to the smallest debt.
  • By paying off the smallest debt in full, we add what we paid to the next smallest debt.
  • So on until all debts are paid in full.
  • When you finish paying all the debts, the money used to pay debts must now go to savings.

Once you have managed to pay all your credit card debts, you must promise not to acquire another debt. That simple promise will make you live a debt-free life, which is no small thing today.