The first thing that may cross your mind if you are in financial problems and trying to sort out outstanding debts is why do you need another credit card. Credit cards are all about convenience and are a service provided by financial institutions to their customers and, if anything, will only make you have more debts than reduce them. And to some extent this is true. This article will discuss why a low interest credit card for debt consolidation can help you sort out your financial problems.
The credit card industry is highly competitive so banks try to make better offers to potential customers and trump their competitors all the time. New incentives are dreamed up to encourage a certain niche to use their credit card. So air miles might appeal to business people that jet all over the place to hold meetings. Whereas credit or money back on clothing purchases may appeal to avid fashionistas.
A low interest credit card with a balance transfer feature is the kind of incentive for a person with debt problems. The ideas behind this is to transfer any outstanding debts on other credit cards to this card. In many cases the transferred debt will have no interest charged on it for a certain time limit.
Once this is done, the sole focus should be to try and clear this debt before the balance transfer introductory period is over. This means you will save on interest payments and the prospect of saving money will motivate you to clear the debt. A beneficial by-product of doing this is that the payment will be once a month, making it easier to manage, rather than having to pay numerous cards throughout the month.
Of course, the one important assumption that seems to pass many people by is that you will work towards paying off the debt. If you think that no interest for six months gives you a six month vacation from your debts then you are approaching the low interest credit card for debt consolidation from the wrong direction.
So in reality, you don't really need a low interest credit card for debt consolidation. You could try to get some other form of credit, like a bank loan instead. A bank loan will probably have a lower repayment rate than a credit card. However it is unlikely to have a 0% repayment rate for the first six months.
However, it is essential that you can repay the debt within the six month introductory period. Otherwise, you may find that a low interest credit card with balance transfer will not save you money by comparison to a bank loan or an equity withdrawal on your mortgage. the interest rates would not stack up by comparison to these types of loans after six months.
With this said, another reason why a low interest credit card may be appealing is that it would probably be a lot easier to get than a bank loan. Provided you stay focused on clearing your debt a low interest credit card with a balance transfer facility can be an effective way to clear your debts.
The credit card industry is highly competitive so banks try to make better offers to potential customers and trump their competitors all the time. New incentives are dreamed up to encourage a certain niche to use their credit card. So air miles might appeal to business people that jet all over the place to hold meetings. Whereas credit or money back on clothing purchases may appeal to avid fashionistas.
A low interest credit card with a balance transfer feature is the kind of incentive for a person with debt problems. The ideas behind this is to transfer any outstanding debts on other credit cards to this card. In many cases the transferred debt will have no interest charged on it for a certain time limit.
Once this is done, the sole focus should be to try and clear this debt before the balance transfer introductory period is over. This means you will save on interest payments and the prospect of saving money will motivate you to clear the debt. A beneficial by-product of doing this is that the payment will be once a month, making it easier to manage, rather than having to pay numerous cards throughout the month.
Of course, the one important assumption that seems to pass many people by is that you will work towards paying off the debt. If you think that no interest for six months gives you a six month vacation from your debts then you are approaching the low interest credit card for debt consolidation from the wrong direction.
So in reality, you don't really need a low interest credit card for debt consolidation. You could try to get some other form of credit, like a bank loan instead. A bank loan will probably have a lower repayment rate than a credit card. However it is unlikely to have a 0% repayment rate for the first six months.
However, it is essential that you can repay the debt within the six month introductory period. Otherwise, you may find that a low interest credit card with balance transfer will not save you money by comparison to a bank loan or an equity withdrawal on your mortgage. the interest rates would not stack up by comparison to these types of loans after six months.
With this said, another reason why a low interest credit card may be appealing is that it would probably be a lot easier to get than a bank loan. Provided you stay focused on clearing your debt a low interest credit card with a balance transfer facility can be an effective way to clear your debts.
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