Get your Debt under Control
You want to navigate to a Balance Transfer Credit Card to pay off your debt during that helpful interest free period, but you’re unclear on how it works. What mistakes could you accidently make?
Don’t worry. We’re here to help.
Credit card debt?
Here are some top tips to save you interest costs and get your debt under control.
- Aim for a Low Transfer Fee
Did you know you could be charged between 1% to 3% of your total balance when your debt is transferred to the new card?
Yes! So, keep an eye on your balance transfer amount – If you’re not careful, this fee can cut into your potential savings and diminish the benefit of the transfer in the first place.
- Annual Fee and Extra Charges
Pay attention to annual fee charges. Why? Because they will be treated as a purchase and therefore will have the same interest rate applied to it as any other purchases made with your new card.
To make the most out of a Balance Transfer, look out for the cards that waive this cost or pay the annual fee upfront to save yourself any extra interest charges.
Also, don’t forget to close your old account after getting your balance transferred. You don’t want to end up paying account costs for a card that A) has nothing on it, and B) you’re not using.
- Don’t just aim for the ‘Minimum’
Most people forget the ‘minimum repayment’ isn’t actually what they should be aiming for.
Yes, that may be all that’s required, but small repayments could make paying off your debt take years, which is time you may not have, nor want to spend paying off debt.
The moment your interest free period ends, you’ll collect interest at the standard rate of your card. You want to avoid any nasty surprises like fees ranging between 12% and 21% or more; otherwise you’re back at square one (and we don’t want that).
Make bigger repayments each month and clear the debt before the fees jump up and say “boo.”
Lastly, calculate how much you’d have to pay each month to clear your debt before the offer ends. Don’t think you can pay it off in time? Look for a card with a longer balance transfer offer.
- First, Focus on your Debt
Not surprisingly, people can often leave themselves vulnerable to more costs and fees when they forget their intention and make purchases using their new balance transfer card.
Purchases collect a different interest rate and credit card issuers are legally required to relocate your monthly repayments to purchases instead of clearing your debt. This will extend the timeframe you have set in place to pay off your transfer and make getting it cleared before the conversion to a higher rate, harder to achieve.
Debt can be overwhelming, and sometimes navigating the number of transfer card options, fees and interest rates without debt assistance can be even more so. But never fear, with these top tips to manage your credit card balance transfer, you’ll be less overwhelmed and debt free in no time.
Need a little extra help with your debt needs?
At Life After Debt® in Perth and Sydney, we have over 50 years combined experience getting people out of debt. We can help you reduce unmanageable debt by offering you affordable, practical debt solutions. Contact us today and together, we’ll find the best debt relief for you.
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