Debt is a parasite, the sooner you get off, the better you are. It eats into your income and leaves you poorer every day. Unsecured debts like credit card debts can have extremely high interest rates which are difficult to deal with. The more the time passes, more amount of debt is added to your account. Ultimately it so happens that you remain trapped in this circle and struggle to get out of it. Consolidation of your debts will provide you with the thrust that you need to break this circle once and for all. The two most popular ways of consolidating your debts is by taking out a debt consolidation loan or enrolling in a debt consolidation program offered by a debt consolidation company.
However, it might happen that you don’t have a property which you need to keep as collateral to take out a secured loan which can be used as debt consolidation loan and neither are you interested in enrolling in a debt consolidation program. In such a case you have a third option which is called the balance transfer method. There are two ways of doing balance transfer. Both the methods are expounded below.
- Balance transfer method – You can do this all by yourself. If you have multiple credit card debts take the card which has the minimum interest on it. Now transfer the balances of all other cards to this card. Thus by transferring your balances to one single card you are able to consolidate your debts and get a lower interest on them.
- Balance transfer cards – Balance transfer cards are available from credit card companies. These are either minimum interest such as 1% or 2% or even zero percent card at times. You have to buy such a card and transfer all your balances in other accounts to this card. Thus you will be able to consolidate your debts. Also you can pay back your debts at interest rates as low as 1% or 2% or even 0%. However, there is a catch to the story. The period till which this rate is offered is introductory, which means after sometime the rate will change. As a result you need to pay off all your balances within that introductory interest rate period. If this period passes on, then the interest rate will increase greatly and as a result it will become more difficult to pay back your debts.
Thus it is very important that you gather enough money through expenditure minimization so that you can pay your debt back fast after using balance transfer card. This will ensure you are out of debt, once and for all.