Money Tips: Credit Card Balance Transfers

Follow these easy steps and take control of your credit card debt and high-interest loans. Transfer your balances and pay one monthly bill.

There are numerous companies encouraging those of us in debt to consolidate our bills. They tout promises of lower interest rates and lower monthly payments. Although this sounds like an easy way to get out from under high interest rates and big monthly payments, signing up for debt consolidation programs actually hurts your credit status. You can take charge and consolidate your bills yourself without the help of a consolidation company. Most bill consolidation companies state up front that they are not loan companies. These companies don't do anything for the consumer that they can't do themselves.

If you have a credit card with a high rate of interest, or if you have numerous credit card bills or loan payments, you need to consider the option of transferring the balances of those accounts to one with a low rate of interest. Doing so can literally save you thousands of dollars over time, and your overall monthly bills will be significantly reduced.

Having numerous monthly bills doesn't necessarily mean that your credit is bad. It just means that you have established a lot of credit. The bottom line is, you may have overextended yourself. If your debt-to-income ratio is high, you need to take the bull by the horns and turn your financial future around. Having a high debt-to-income ratio can make it difficult, if not impossible, to obtain a loan for things such as cars, homes, and other necessities.

Begin your quest to lower your monthly debt by calling the credit card companies you already do business with. Ask them what the percentage rate is for transferred balances. Be sure to ask if there is a balance transfer fee. If there is a balance transfer fee, then keep on looking. There are many credit card companies out there that don't charge balance transfer fees. Some implement a flat rate for every balance transfer, while others charge a specific percentage on the amount you are transferring. As you can see, this could add significantly to the principal balance of your debt.

If you aren't satisfied with the offers made by your current debtors, look for a new credit card company that meets your criteria. Most people are hit with a constant barrage of credit card offers by postal mail. Instead of shredding these offers, read the fine print and see if there's a company that can meet your needs.

Balance transfers can usually be made by phone or with balance transfer checks. These checks are very convenient since you can use them in the same manner as you would a personal check. Balance transfer checks normally expire rapidly after receipt, so keep an eye on the expiration dates. Request up-to-date checks if need be.

When your high interest bills arrive, send your debtors balance transfer checks from your low-interest credit card account. Eliminate any future temptations and problems by shredding the old cards. Destroying the cards is the most important step to getting out from under debt. If you don't have them, you can't use them.

Once all of your high-interest balances have been transferred, you will receive one monthly bill. Make it your goal to pay at least $25.00 more than the minimum due. Paying only the required monthly payment wouldn't put a very large dent in the balance. Pay what you can over and above the minimum, and you'll see the principal balance decline at a rapid rate.

When your bills are once again under control, be financially responsible and avoid using credit cards for unnecessary purchases. Your credit score and debt-to-income ratio will improve, and you'll be able to pay cash for the necessities of life. Transfer those high-interest debts, and take control of them before they overpower you.

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