Tips to safely use credit card balance transfer offers to get out of debt.

Tips to safely use credit card balance transfer offers to get out of debt.

If your reading this your probably looking for ways to get out of debt. Are you considering taking advantage of one of those enticing balance transfer offers? Credit card debt can be stressful and having it neatly packed on one or two cards can provide a sense of control and way to get out of debt.

The basics: You transfer your balance from a high-interest credit card to a balance transfer credit card that offers a promotional rate of 0% for a period of time. Then you pay off your balance within the intro period and avoid paying interest.

Sounds good doesn’t it? It is if you avoid some common pitfalls.

Know when the promotional rate expires.

Your goal is to pay off your balance during the promotional rate period.

If you have a balance att he end of the promotional period, then the “standard purchase or cash advance” rate will be applied. This means that the APR rate will be applied to your remaining balance. Plan your monthly payments, so your debt is paid off by the time the intro period ends.

Calculate your monthly payment: $5000 plus a 3% transfer fee $150 = $5150/18 (months) = $286.11. Round it up to $300.
Make this payment every month, and you’ll be debt-free when the intro period ends.

Know the non-promotional APR.

Don’t apply for a credit card or use a balance transfer offer on a card that has a high standard APR unless you are confident you can pay off the card within the promotional period.

Don’t stop making payments on your old card too soon.

I can’t emphasize this enough! Confirm your balance transfer has posted. Once posted you may think your old card is paid off in full, but depending on how the card calculates the interest you may have one last bill for interest only that needs to be paid. Check you’re the balances on the old card for a couple of months to avoid unnecessary dings to credit report for paying late.

Save a copy of the final bill showing no transactions and a zero balance.

Don’t pay late!

Most balance transfer cards have a clause that tells you what triggers the loss of a promotional rate. If you make a payment late, then you’ll lose the 0% APR and the purchase rate will be applied to your remaining balance.

Set up automatic payments, text reminders or e-mail alerts. I use the BillTracker apps to records all my due dates.

Never assume that a 0% promotional ate applies to cash advances or new purchases.

Don’t transfer a balance to a card that already has a balance. Pay off the card first then complete your balance transfer.
Some cards offer a promotional rate for both balance transfers and purchases, however you won’t get out of debt if you keep spending.

In closing

A balance transfer could be a good way to get out of debt if you have control over your spending.Once you see your credit card balance going down, you’ll be motivated to get out of debt faster and increase those payments to get to zero even quicker.

Warning:

If you can’t control your spending don’t use balance transfers as a way to manage debt! You will most likely end up deeper in debt, I know because it happened to me. Luckily, I learned my lesson and now can use a balance transfer to my advantage.

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