You are reading Week 33 of 52 Weeks to Eliminate Debt & Curb Spending. Please read the overview here to learn more about the series & get your FREE financial planner. If you just joined us, please start with week 1.
If your debt situation seems to be at a stand still, you may be wondering if balance transfers and debt consolidation could potentially help you overcome a plateau. There are many options when it comes to eliminating debt from your life. As we have journeyed through this year, balance transfers one topic we want to include as it can be a great option.
When working toward getting rid of debt, with almost any choice you make the numbers are the important factor. Look not only at immediate numbers, but at your overall goals as well.
Will the balance transfer result in lower interest or lower payments? Ultimately the goal behind initiating a balance transfer or debt consolidation is to make your financial situation better. Look at your options and make sure that the balance transfer will come with a lower overall interest rate as well as more reasonable payments for you each month. You still want to maintain the goal of paying more than your minimum payment, but if you are currently struggling with that, this might help the situation become easier until you get in a better income place.
Do your research to see what card is best for you. Also, keep in mind that you may be getting a great rate with the balance transfer but if you miss a payment, you’re interest rate could skyrocket. Ensure you’re in the right place financially to make your payments on time.
Remember – You are not transferring the balance to a new credit card, just to add more debt to the card that now has a zero balance!!!!
Don’t close accounts after the balance is clear. You see that zero balance and instantly get the desire to close the account so you can no longer use it or have any additional debt. This however, is not a good decision. An account in good standing that shows a paid balance is good for your credit score. Leave the account open and stop using the account. Alternatively, put one of two purchases on the card that can be paid off each month to keep the account “active”.
If having the account is too tempting, cut up the credit card. Out of site, is (usually) out of mind.
Avoid using consolidation companies. There are many companies out there that promise to consolidate your debt for you. Avoid these and work with individual creditors instead. Not only will a company charge a fee (more debt), you will typically not get as good a rate, payment or deal as you can when handling this for yourself. Look back at our how to negotiate with creditors article from a few months ago.
As you focus harder on paying down debt, don’t let balance transfers or debt consolidations frighten you. While they are not always recommended, they do have their place in the world of getting rid of debt. This is a great way to make sure you can manage your monthly payments with ease.
Week 33 Challenge:
If you are in a situation where credit card balance transfer is right for you, start looking into your options and crunching numbers. This may be a good way to help pay off the last of your debt even faster.
Disclosure: I am not a financial adviser nor do I have formal financial training. All articles are for informational purposes only and should not be interpreted as financial advice or consultation. Please consult your account and/or financial adviser before making changes to your finances. All situations are different, so please consult a professional to determine your individual needs.