Should You Consider Balance Transfer Credit Cards As A Debt Relief Option?

I’m Overwhelmed By My Debts, Can Balance Transfer Credit Cards Help Me!

If you are overwhelmed by your credit card debts and are honestly facing a financial hardship, balance transfer credit cards are not for you. The truth is, to qualify for any of the offers that are even remotely worth applying for, you will need to have good or even excellent credit scores. Not to mention, to qualify for a balance that’s substantial enough to transfer your outstanding debts, you will need to have a debt to income ratio that’s less than 15%. That means that your total credit card and other unsecured loan debts would need to amount to less than 15% of your annual income. If you are honestly facing a financial hardship due to your credit card debts, this will not be the case for you. However, there is a great option for you, it’s called credit card hardship programs. I recently wrote a guest post for Top Finance Blog on this topic called, “Understanding And Applying For Credit Card Hardship Programs”.

I Just Want Lower Interest Rates, Are Balance Transfers For Me?

If you are not currently dealing with a financial hardship and you make it a point to make your payments on time, balance transfer credit cards may be an option for you. Before choosing this option however, you may want to give your current lender a call. Although, we often think of lenders to be horrible companies that focus only on the bottom line, this isn’t quite the case. Lenders do care about their customers. Let’s be honest, without customers, lenders have nothing. If you have been the perfect customer for them, one that pays on time, they may be willing to reduce your interest rate with a simple phone call. Simply call your lender, when the representative asks what they can help you with, say “I keep getting balance transfer offers in the mail. I like to work with you but, these rates are pretty good. Is there anything that you can do to make keeping my current card the better choice to make?”. If you’ve paid on time, 50% or more will be willing to make a deal in most cases! If they don’t reduce your rates, then, consider balance transfer credit cards.

I Can Afford My Debts But It Sure Would Be Nice To Have Only One Account To Manage…

You are the perfect candidate for balance transfer credit cards. Now, let’s see if there are any offers out there that can meet or beat your overall long term interest rates. If so, we’ll check your credit and debt to income ratio to make sure you qualify! If all adds up, we may be able to get your debts transferred as soon as next week!

If You’ve Decided Balance Transfer Credit Cards Are Your Best Option…

If you have read through this article and come to the final conclusion that balance transfer credit cards are the best option for you, there are a few things that you should know. Here are a few crucial factors that you should remember when using balance transfer credit cards to consolidate debts and reduce overall interest rates:

• Balance Transfer Credit Cards Come With Balance Transfer Fees – In most cases, it’s not free to transfer a balance. If you decide to transfer a balance, chances are, you will pay anywhere from 3% to 5% of the amount of the transaction as a fee for the service of transferring your balance.

• Promotional Interest Rates Are Only Short Term – Although promotional interest rates are fun and, there’s no reason not to take advantage of them, it’s important to remember that they are only short term. When comparing the different offers available to you, you should make sure to put more weight on your long term interest rates and less on your promotional rates!

• You Don’t Want To Miss A Payment – Although, this is important when using any credit card, it is more important when using a balance transfer credit card. The point of using these cards is to consolidate your debts into one, easy to manage account with a low interest rate. Even if you are in the middle of your promotional period, missing a payment could cause your interest rates to increase to the default interest rate. In many cases, that’s 29.99%! Once this happens, in many cases, the damage is irreversible for at least 12 months.

My Final Thoughts On Balance Transfer Credit Cards As A Debt Relief Option

Balance transfer credit cards are great financial vehicles. However, if you do not drive your car properly, you may end up in an accident. This is no different when it comes to balance transfer credit cards. The key is, figuring out if this is the best option for you. If you decide that it is, it’s up to you to do a decent comparison of the offers available and keep your new account in good standings.

This article was provided by Joshua Rodriguez, owner and founder of CNA Finance. Join the conversation about this article on Google+!