This article is part of a series on credit card debt reduction strategies. Visit the links at the end of this article to read about other debt reduction strategies to find one that’s right for you.
If you want to get out of credit card debt, there are several ways to go about it. Most credit card debt reduction strategies revolve around the idea of paying off each of your current credit cards. For some people, that might get too confusing (how much to pay on each card every month, how to minimise interest, etc.).
Does that sound like you? If so, you might want to consolidate those credit card bills into a single account with a balance transfer (or with a loan).
Reasons to Consider Balance Transfer Debt Consolidations
There are several positive aspects of debt consolidation when it comes to paying down your credit card debt. Some of those benefits include:
1. One total balance to pay down
2. One interest rate to worry about
3. Simplified recordkeeping
4. One cheque to send each month
5. A lower interest rate in some cases (if you transfer some higher interest card balances to a lower interest credit card, or if you can pay off the full debt within a new card’s introductory offer period like the 0% interest for six months on balance transfers with the ANZ Balance credit card)
The Downside of Balance Transfer Debt Consolidations
Using balance transfers or other debt consolidation as a debt reduction strategy might sound good on the surface, but know the downsides and risks before pursuing this plan.
1. You might be not get approved for all of the balance transfers you hope to make.
2. You could end up paying higher interest than some of your current credit cards charge.
3. You might have to pay high balance transfer fees up front.
4. You might be more easily discouraged when you have one huge debt to pay off (the balance will appear to decrease more slowly than watching small balances disappear).
Debt consolidation sometimes gets a bad reputation for “recycling debt.” Don’t let other people’s opinions determine the right debt reduction plan for you though. Compare your options. If debt consolidation makes sense in your situation due to your balances, interest rates, and payment habits, it might be your ticket to eventually living debt-free.
If this credit card debt reduction strategy doesn’t sound right for you, that’s okay! Check out the other posts in our series to compare this plan with other debt reduction plans:
• Pay Off Lowest Balances First
• Pay Off Highest Interest Cards First
• Flat Rate Credit Card Payments
• Balance Transfer Debt Consolidations
Don’t be afraid to try different debt reduction strategies. If one doesn’t work for you, don’t give up — try another debt reduction plan until you find the right one for your own situation.
Similar Posts:
- Comparing Balance Transfer Credit Cards
- Options For Transferring A Credit Balance
- Choosing a Credit Card: Determining Need Then Purpose
- When should you go for consolidating credit card debt?
- How to Make a Balance Transfer Work for You
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