How to Use Balance Transfers to Get Out of Debt

Being in debt can be quite overwhelming. In fact, it can sometimes feel as if you will never be out of debt again. While there are many strategies that can be used to help you get out of debt, one of the best involves taking advantage of balance transfers and using special rates to your advantage. With this step-by-step guide, you will learn how to use balance transfers to help you get out of debt.

Instructions

1. Add up all of your current credit card debt. Make sure to include all of your credit cards, including those that are from department stores.

2. If you have a current credit card that is offering a low APR on balance transfers, check your available credit to see if you can pay off all of your other credit cards with that card. If so, call the number on the back of your credit card in order to ask how to complete balance transfers for all of your cards.

3. If you do not have a credit card with a low APR on balance transfers or if you do not have a credit card that can pay off all of your credit card debt, look on the Internet for a credit card with a great introductory rate on balance transfers. Many will give you a 0% APR for the first year of cardmembership. Apply for the new card and complete balance transfer information on the application.

4. Create a budget that will allow you to pay off the balance transfer credit card before the introductory rate is complete. If this is not possible, pay off as much as possible before the introductory period expires. You may need to consider applying for another balance transfer card when the introductory rate is complete in order to avoid high APRs.

5. Stick to your budget and pay off the balance transfer card while also avoiding putting new debt on your other credit cards.

Tips & Warnings

• The best balance transfer credit cards are those that keep the low introductory rate in place until the transfers are paid in full. Look for these cards rather than those with low APRs that last for only 3 months or even a year.

• Getting a lower APR is key to using balance transfers to help you get out of debt, as having a lower APR will help you stretch your dollars further when you make your payments.

• Pay as much as you can each month toward your debt in order to get out of debt in a timely manner.

• Don't get caught up in the trap of transferring all of your debt and then maxing out your credit cards once again. Remember, transferring balances is not meant to be a way to get out of paying bills. Rather, it should be a means to an end.

• Be sure to check on what the interest rate will be on the credit card after the introductory period is complete, as this rate may be higher than what you are currently paying.

• Find out about balance transfer fees. If the fees are high, you may spend more on these fees than you would on finance charges with your other credit cards.