Terms of the Offer

As appealing as a 0% APR balance transfer offer may seem on the surface, wise consumers will do a bit of investigating before signing on the dotted line and accepting the offer. Some offers may feature a zero percent APR for a very limited (usually around six months or so) period of time, while some may give you this great (free) rate for longer. For consumers looking to pay debt off fast, such as within the amount of time that the balance will be billed at zero percent, these offers are ideal. If you plan to take your time paying off the balance, then make certain that the APR that you will be charged after the initial “welcome” period is not higher than what you are already paying. You must also look at how much it will cost to transfer your balance from your existing credit cards to a new card when determining if a 0% APR balance transfer offer is for you. Most credit card companies will charge some type of fee for transferring the balance to your new card. Take this additional cost into consideration when making your decision. Also look at these possible pitfalls for the offer you are reviewing:

• Many people transfer a balance on a 0% APR credit card and then continue to make new purchases on either the old card or on the new card. This can lead to a never ending cycle of debt. If you transfer the balance over, don’t make any new card purchases until you have paid off the balance in full.

• Check to see if the introductory APR on the 0% balance transfer offer reverts over to a higher rate. Many card companies will revert the account over to what is known as the “cash advance rate” after so long if the balance that was transferred is not paid off within a particular timeframe. This is the same elevated rate that you are charged when you do a cash advance – and can be quite expensive.

• Find out before taking advantage of the offer if you are required to pay an annual fee. A high annual fee can make transferring your balance over less of a good idea if your savings go down the drain with it.

Option #1: Home Equity Line of Credit (HELOC)

A HELOC, or Home Equity Line of Credit, is a loan secured through the equity in a borrower’s house.  The loan differs from other types of loans in that the entire amount is not extended up front, but rather over a period of time that the borrower must repay.  This type of loan was very common in the last decade not only because the home was often the most valuable asset and the interest on the loan was considered tax deductible.  If you can get a HELOC this may be the easiest way to consolidate loans.  However, because many banks and lending companies have frozen HELOCs, this option may not be available.  Still it is a good idea to check it out with your mortgage or local bank.

Option #2:  Personal Loan

A second option is to take out a personal loan directly with a local bank.   Certain legislation is being introduced to increase the amount of money available for loans at small banks.  Of course, getting this option is dependent upon getting a better interest rate than what you have on your credit cards.  It does no good, for example, if you move your 10% credit card loans to a 15% bank loan.

Option #3: Transfer the Balance to New Credit Card

When you are trying to tackle your credit card debt, taking out another credit card seems counter-intuitive.  But many credit cards offer an introductory period where balance transfers are 0 percent for the first few months or a fixed rate for the life of the balance.  If you go with this option, though, a word of advice: read all the terms beforehand and make sure you understand exactly what the terms are.  A lot of companies will raise the interest rate for even a single late payment of 24 hours.

Often times, credit card debt gets out of control, becoming difficult to manage. One thing is certain: those who get into it end up paying the consequences for their actions. Improper credit card debt management leads to a slew of minor and major problems in every step that you may take in the future, whether it is buying a car with a loan or getting a loan approved to buy a home. You can prevent yourself from getting into this slump by managing your finances. But if you’ve already gotten into debt, there are a few ways in which you can get out of it.

First and foremost, once you have realized that your credit card bill has gone too high, STOP SPENDING! Don’t buy anything and everything just for the sake of buying. If you genuinely need something, buy it using cash, not the credit card. Start by filing all your credit card bills, analyzing them, checking all the different accounts, and making note of the minimum payments due on each. Once you have gathered all the amounts, take a look at all your incoming funds and calculate how much and how frequently you can manage to make you credit card debt payments after removing all your usual expenses (keeping them as minimal as possible and sticking to them).

Another great tactic to make paying off your debt easier is to look for 0% credit card balance transfer offers. If your credit rating isn’t too damaged you may be able to quality for new credit with a very low (or even zero) interest rate, allowing more of what you pay each month to be taken off your principal balance. When you have a high interest rate and you only pay the minimum each month your payments are barely scratching the surface of your debt.

See to it that you make the payments regularly, giving more priority to your personal loans (including credit card loans), and maintain a good credit history from here on out. This will make it easier to get loans approved in future when it is really important. When all is said and done, you must always be cautious when using your credit card. Think thrice before every purchase you make and always remember one thing – the more you delay your credit card debt payments, the more you end up paying!