High-interest credit card debt is among the most debilitating. While you may be capable of making minimum payments, its interest rate makes it nearly impossible to reduce debt in a short amount of time. Transferring debt to a lower-interest credit card is a valuable option. Known as balance transfers, this financial process could potentially benefit your bank account. Take a moment to learn how balance transfers can save you potentially thousands in interest payments.
Reduces Total Debt Paid
When debt is transferred from a high-interest to a low-interest credit card, you’re saving a significant amount of money. The higher your debt, the greater your overall savings will be. Not only do balance transfers save on the overall interest payments, but your ability to reduce principle debt is much greater with a lower-interest card. The primary purpose of engaging in this financial decision is to shorten payment duration while simultaneously reducing your total debt expenditure.
Consolidates Multiple Debts
If you have debt split among multiple credit cards, consolidating this debt by transferring all balances to a single low-interest card not only simplifies monthly payments, but also reduces overall interest payments according to Your 650 Score. Another reason balance transfers are essential in this situation is to act as a preventative. With multiple monthly bills, due at different times, it’s easier to forget about a bill. Did you know 30-percent of your total credit rating is determined by your payment history. Therefore, even a single late payment can lower your score; disastrous if you’re looking to build your credit rating (www.your650score.com). By transferring balances to a single credit card, you only have to deal with one monthly bill instead of several.
Transfer Other High-Interest Debt
Are you paying interest for a car, furniture or private loan? If you’re financing multiple items, you’re likely spending a significant amount of money on interest rates. With credit card balance transfers, debt from non-card related purchases may be transferred. Therefore, you can take the high-interest loan from the furniture outlet and transfer it to your low-interest credit card. The loan provider is satisfied as they’re paid in-full, and your bank account is pleased as you’re saving potentially hundreds, if not thousands, in interest payments.
Read the Fine Print
While it’s obvious how credit card balance transfers can simplify your life and boost your available funds, you must also be aware of certain drawbacks. Certain credit cards promise an ultra-low interest rate, but this may only be for an introductory period; typically six months. If you can pay off the balance within that time period, then you have very little to worry about. Otherwise, confirm post-introductory offer interest rates before agreeing.