What is Balance Transfer Credit Card and How Can it Help You Pay off High-Interest Debt?

balance transfer credit card - graphics by Debt Aid Consulting

If you’re struggling with high-interest credit card debt, you might be feeling overwhelmed by the monthly payments and the amount of interest you’re paying. But there is a solution that can help you get out of debt faster and save money in the long run: a balance transfer credit card.

What is a Balance Transfer Card?

A balance transfer credit card allows you to transfer your existing credit card balances to a new card with a lower interest rate. This can help you save money on interest charges and pay off your debt faster, as more of your payment will go towards reducing your balance.

How balance transfers work

When you transfer a balance to a balance transfer card, you’ll usually be offered an introductory interest rate that is lower than the regular rate. This introductory rate can last for a set period, such as 6 months or a year. During this time, you’ll be able to pay off your balance at a lower interest rate, which can save you money in interest charges.

However, it’s important to note that once the introductory rate period ends, the interest rate on your balance transfer card will typically increase to the regular rate, which can be higher than the rate you were paying on your original cards. Additionally, some balance transfer cards may charge a balance transfer fee, which is usually a percentage of the amount you transfer.

Things to consider before applying for a balance transfer card

Before applying for a balance transfer card, it’s important to consider the fees and interest rates associated with the card. You should also consider whether you’ll be able to pay off your balance before the introductory rate period ends, as this will help you avoid paying higher interest rates in the future.

  1. Look for a card with a 0% introductory APR: Many balance transfer cards offer a 0% introductory APR for a certain period of time, typically 12-18 months. This means you won’t have to pay any interest on your transferred balance during this time, which can be a huge help in paying off your debt.
  1. Check the balance transfer fee: Most balance transfer cards charge a fee for transferring your balance, typically 3-5% of the amount transferred. While this fee can be a bit of a bummer, it’s usually still worth it if you’re transferring a high-interest balance to a 0% APR card.
  1. Pay off your balance before the introductory period ends: Once the introductory period ends, the interest rate on your balance transfer card will likely go up significantly. Make sure you have a plan in place to pay off your balance before this happens, so you don’t end up right back where you started.
  1. Don’t use the card for new purchases: While it can be tempting to use your new balance transfer card for new purchases, this will only add to your debt and make it harder to pay off. Instead, focus on paying off your existing balances before making any new purchases.

Debt Settlement and Balance Transfer Credit

Debt settlement is another debt relief option that can be used in conjunction with balance transfer credit. Debt settlement involves negotiating with your creditors to settle your debt for less than the full amount owed. This can be an effective way to reduce your overall debt and make it more manageable.

It’s important to note that debt settlement may not be the right solution for everyone. It can have negative impacts on your credit score and may not be a viable option for individuals with low income or limited assets.

Balance transfer credit can help mitigate the negative impact of debt settlement on your credit score. By transferring your remaining balances to a new card, you can keep those accounts in good standing and avoid further damage to your credit.

If you are considering debt settlement, it’s important to work with a reputable debt settlement company or certified debt consultants who can guide you through the process and help you negotiate favorable terms with your creditors. At Debt Aid Consulting International, we have a team of debt consultants who are IAPDA-certified specialists (International Association of Professional Debt Arbitrators) who can negotiate with your creditors.

We offer free consultation via messenger or you can contact us through email at info@debtaidconsulting.com or call us at 888-341-5234 (US / Canada Toll-Free No.) and +632 8271 3482 (Philippines Landline No.).

Contact us for your Debt Analysis Consultation.
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