NEW YORK, NY--(Marketwired - Jul 9, 2014) - There are many ways to lower debt levels, and they don't all involved increasing income levels and making larger payments. With smart changes, debtors can bring down the expenses associated with their debt to make their payments go further. They can speak with credit card companies about lowering interest rates, and they can also balance transfers to cards with more attractive terms. According to CreditCardChaser.com, a leading credit expert, here are three great reasons consumers may want to take another look at a balance transfer for paying off their credit card debt:
Watch for the Great Deals
Credit card companies make money in several ways, including monthly interest charges. If they can convince consumers to transfer an existing balance over to their company, then they'll ultimately start making money off existing charges. They offer special promotions as an enticement, and these promotions allow consumers to accrue substantial savings. Offers are typically for zero percent interest, and the special savings last anywhere from 6 to 24 months.
The savings with this kind of special are impressive. A credit card with a balance of $2,000 and an interest rate of 24 percent could accrue an additional $40 a month in interest charges. With the balance transfer, the interest charges are eliminated. When consumers maintain the same monthly payment, the balance will drop faster to help pay the card off in record time.
Consumers may also decide to pay a balance off in full during the introductory period. To do so, simply divide the balance being transferred by the promotional period. To pay off that $2,000 balance in 18 months, consumers would need to make a payment of $111.11 every month. This can make it easier for people to stay on track and pay debt off quickly so that they can improve their financial position in the long run.
Convenience of One Payment
It can become tiresome to keep track of different cards and try to remember all the payments. Late fees start to rack up, and interest is charged on late fees once they're assessed. Consumers can transfer all of their balances to one card and enjoy the great convenience of only making one payment. Late fees are typically avoided, and that also helps bring the balance down faster. When consumers have extra money, they don't have to make a choice about which card to pay down first. They can simply make an extra payment to the one balance transfer card and watch the remaining amount fall.
Other credit cards typically have higher interest rates, and that can become costly. In addition to offering special promotions, balance transfer cards generally have lower interest rates. Dropping the interest rate on a $2,000 balance from 24 percent to 12 percent saves consumers $20 a month in interest charges. That savings allows people to either reduce their monthly payment or pay their balance down more quickly.
Some Caveats to Watch For
Not all balance transfers are created equal. Some have a transfer fee that can be as much as three percent of the amount transferred. However, consumers can still save money with these specials. In the case of a $2,000 balance at 24 percent interest, the balance transfer fee is only $60. That's less than two months of interest charges, so consumers still benefit.
Before transferring any balance, consumers are encouraged to check their bills for discrepancies or disputed amounts. Once these balances are transferred to another company, consumers lose the ability to dispute them and have corrections made.
There's no doubt that balance transfer cards are an important tool in the consumer arsenal. The special promotions provide people with handsome savings. People can use the savings to lower their monthly payments or to pay off the remaining debt faster. Take care to avoid charging on a card that has been paid off through a balance transfer as this can lead to higher debt levels and a more precarious financial position. However, the card that now carries the balance can be used to replace all of the smaller store credit cards for more streamlined finances and better control over debt levels.
About Credit Card Chaser:
Credit Card Chaser is an authority credit card site that offers innovative comparison tools, reviews, calculators, and reports to help consumers find the best credit card for them.