Use a balance transfer card to manage your debt
Spiralling debt is a big problem for many people and watching the light at the end of the tunnel get further away while interest accrues can be crushing.
While borrowing from Peter to pay Paul by taking out extra loans to consolidate existing debts might seem counterintuitive, using a balance transfer card properly can help you do just that in a responsible way.
In This Guide:
- Organise your bills
- Pay as much as you can each month
- What is a balance transfer card?
- Things to be aware of when using a balance transfer card
Organise your bills
Before anything else, to avoid every increasing debt, it is important that you get all of your bills and monthly payments organised and planned out.
Something as simple as keeping all of the paperwork in one place and deciding on a monthly date on which you make your regular payments can be very helpful. Ideally, you want this date to be soon after your pay day, ensuring that you’ll have enough money in your account to pay off what you need to pay.
Things like mortgage payments and utility bills should take priority here, but it is important to keep on top of your credit card bills as well.
Pay as much as you can each month
Each credit card will come with a minimum repayment amount each month that, if regularly met, will stop your interest from getting too high.
However, where possible, you should be exceeding this minimum payment and paying off as much as you can reasonably afford to every month. If you only pay the minimum amount each month, it could take you years before your credit card debt is eliminated, and all the while interest will be accruing.
What is a balance transfer card?
A balance transfer card is a kind of credit card designed to help people consolidate existing credit card debts and to give them extra time to pay them off without being charged excessive interest.
These cards tend to come with an introductory offer of 0% interest for a certain period of time, meaning that you can transfer debt to one of these cards and give yourself more time to pay off the original debt without it growing out of control.
Importantly, you can only transfer debt from one card to another if the cards are issued by different companies. You will not be able to do so with two cards issued by the same bank.