Can a balance transfer card help you save money? If you use it properly during debt consolidation, it can. Unfortunately, a lot of people have never enjoyed this benefit. According to one survey, more than 6 out of 10 consumers have never transferred a balance with 0% APR. And not everyone did it by conscious choice. 5% of the survey respondents said that they didn’t even know that was an available option.
And that is a huge waste of opportunity! With the huge amount of debt that Americans owe, every penny that can be saved is a huge deal. Considering the high-interest rate that credit cardholders have to face, we need to be smarter with how we use our money. The faster you can pay it off, the more you can save on the interest amount that is usually added to it.
That is actually what makes the use of a balance transfer card all the more ideal. It can bring a lot of benefits to your finances. One of the most prominent is the money that you can save as you try to pay your way out of debt.
How to save money when using a balance transfer card
If given a choice, most people would prefer to save money rather than lose weight. At least, 84% of the people who were asked said they prioritize saving money. Considering how health-conscious society has become, this is making a statement.
So if like these people, you are serious about saving money while paying off debt, then you need to consider using a balance transfer card to do that. It is not hard to do. And if you do it correctly, you will be guaranteed to save a lot of money.
Here are the things that you need to do.
Analyze how much debt you really owe
First of all, you have to figure out how much you really owe. More importantly, you want to see what debts you can consolidate through a balance transfer. This will give you an idea about what you should be looking for in the balance transfer card you will use.
Most of the time, the best debts to consolidate are those with a high-interest rate. But if you are only considering a 0% interest balance transfer, then you may be able to consolidate more debts. Just make sure that you do the math so you understand the problem that you have to solve.
Research and choose the best option
Once you have a clearer understanding of your problem, it is time to find the specific card that you will use to transfer your balance. There are a lot of credit card companies offering a balance transfer card. Look and compare the cards that will give you the best deal. It is not just about the 0% interest rate. You have to know about the fees that you need to pay. Most of these require a balance transfer fee. But you can have this waived if you shorten the promo period.
Just do the computation to see where you will save more. Sometimes, paying the balance transfer fee will end up giving you more savings.
Create a plan to pay off the debt within the promo period
When you have chosen the balance transfer card that you will use, it is time for you to create a repayment plan. Remember that your goal should be to pay off your balance before the promo period ends. That means you need to customize your repayment plan. Let’s assume your consolidated debt is $5,000 and you have a total of 20 months before the 0% interest rate expires. Your payment should be $250 a month or more. This way, you can pay off your debts in full before the 0% promo rate is over.
Commit to your payments
Once you have your repayment plan, you need to commit to it. This is how you can pay off your consolidated debt fast. Stick to the plan and make sure the other aspects of your finances are aligned with this. For instance, your budget plan should reflect your monthly debt payments. If you have to pay $250 a month, make sure that the amount is secure. Do not use it on something else. If there is danger in you using it, then just set up auto-payments. That way, the money will be deducted from your account automatically. This will also help you avoid late payments – which may also lead to other charges and fees.
As long as you stick to your repayment plan and you successfully pay off your debt within the promo period, you will save a lot of money.
Why you need to consolidate through a balance transfer card
The truth is, a balance transfer card is not the only way to pay off credit card debt. There are other options. But using a balance transfer as your strategy to get rid of your debts does have its benefits.
It gets rid of the high-interest rate
First of all, it gets rid of the high-interest rates of your credit card debts. It is the only one that offers a 0% interest rate. It will be for a limited time – that is true. But if you can pay off all your debts within that period – then it matters. It will have a significant effect on your finances. The money you will save can be used on something else. For instance, it can help you boost your emergency fund. Or it can be used to save up for another financial goal.
It simplifies your payments
Since this is debt consolidation, it naturally leads to a more simple payment method. You will still be responsible for paying off your dues each month. But you only have 1 account to pay instead of several. That makes the process easier and less stressful. If it is less stressful, then it will allow you to have a more positive outlook in life. You will have the energy and motivation to start on other things that will also improve your finances. You can also work on increasing your income so you can pay more of your debts. When you are less stressed, you get to live healthier too. So it is a win in a lot of aspects of your life.
It can help you develop better credit habits
Finally, using a balance transfer card will help you develop credit habits. After all, it is still a credit card. While you are paying it off, you can practice restraint. You will learn that you can have a credit card and still refrain from using it unless you really have. You will get used to consulting your budget to ensure that you are paying your dues each month. These are all something that you can practice while you are in the midst of completing this consolidation strategy.