If you have debt spread over multiple credit cards, there are several strategies you can use to regain control of your finances. For example, you may decide to tackle the credit card with the highest interest rate first. Once that one is eliminated, you can then begin to pay off the one with the second-highest interest rate, etc.
Another option is to use a balance-transfer credit card, allowing you to consolidate all your debt onto one card for ease of management. This option typically allows you to save on interest rates as well.
Here are five things you need to know about balance-transfer credit cards before you apply for one:
- You are transferring money to a new credit card, not eliminating the debt that you currently have
- You have the option to transfer other debts as well, so strongly consider this
- There are fees associated with balance transfer credit cards, such as those that are charged for simply making transfers (typically 3 percent of the total)
- Your introductory balance-transfer rate will eventually expire (generally lasts 12 to 21 months)
- You can use a balance-transfer credit card to make new purchases, so beware of this in the future as it can add to your financial problems
There are many benefits of using balance-transfer credit cards, so it’s definitely something to consider if you’re facing a difficult financial situation.
If you learn that a balance-transfer credit card won’t help, or if you’re not interested in simply moving your debt around, you may want to explore your bankruptcy options. With this approach, it’s possible to eliminate some or all of your credit-card debt in a timely manner.