If you’re tired of juggling multiple credit card payments and want a simpler way to pay down debt and get your finances back on track, credit card consolidation may be the solution. A balance transfer is one of the most common types of credit card consolidation. It works by transferring your existing credit card balances to a new credit card, so you only need to make one payment each month on one credit card.
Potential Benefits of Consolidating Credit Card Debt with a Balance Transfer
There are many benefits to consolidating credit card debt with a balance transfer, including but not limited to:
Potential Downsides of a Balance Transfer
Here are a few things to consider before going through with a balance transfer:
How to Do a Balance Transfer
Consolidating credit card debt with a balance transfer is a relatively simple process that can be completed in a few easy steps.
1. Research various credit cards and balance transfer offers to find one for which you’ll qualify. Try to find one with the lowest introductory interest rate, a long introductory offer period, and low or no fees. Once you’ve identified a card that works for you, apply just like you would for any other credit card or accept the pre-approved offer you’ve received.
2. Once you’re approved, contact your new credit card company and ask to have the credit card balances you wish to transfer transferred to your new card. Depending on the credit card company, the transfer may also be made with provided balance-transfer checks.
3. When the balances transfer to your new card, make your monthly payments on time, every time to reduce your debt. Be sure to make more than the minimum payment due to reduce your debt quicker.
Is Credit Card Consolidation Through a Balance Transfer Right for You?
Consolidating the balances on your credit cards may seem like an obvious choice if you’re serious about becoming debt-free. But there are a few things to consider before making a decision, including:
Consolidating credit card debt with a balance transfer can be a good way to streamline your monthly payments, reduce the amount of interest you pay, and help you get out of debt faster. But it’s not the right move for everyone in debt. It’s crucial to first consider your credit history, review your budget, and compare the interest rates and terms you qualify for on any new credit card to what you already have. By taking the time to first do a little homework, you should be able to identify whether a balance transfer is a fiscally sound move for you.
Jennifer Brozic began her writing career at seven years old, when she scribed the epic tale of her kite-flying (and skyward-looking) uncle crossing paths with a deep hole in a sandy beach. After earning a degree in journalism, Jen worked in the insurance and financial services industries before earning a master’s degree in communication management. She left the nine-to-five corporate world in 2010 and has been freelance writing ever since. Her areas of expertise include insurance, financial planning & budgeting, and building credit.
Credit card balance transfers are often touted as a low- (or no-) interest way to quickly pay down high-interest credit card debt. And if you have a plan for keeping your spending in check, reducing your expenses, or earning extra money, a balance transfer may be a good option to help you pay down credit card debt.
One of the benefits credit cards offer is convenience. They make it easier to pay for everyday expenses and larger purchases that would otherwise require carrying a lot of cash. But, if you’ve settled into making only the minimum required payment each month on your credit card, you may find you’re paying an excessive amount of interest and your outstanding balance seems to be decreasing at a snail’s pace.
Debt happens. For better or worse, it has become an undeniable part of modern American life. It can be unintended debt, such as medical expenses, which a recent study by the Kaiser Family Foundation and New York Times found affected nearly one in four adults ages 18-64 in the United States. Or it can be intentional debt, the kind many of us go into voluntarily in order to buy a home or car or pay for higher education.