Credit Card Balance Transfers For Unsecured Debt Consolidation–Are Balance Transfer Options Helpful?

Credit card debt often comes from various sources and has been problematic for borrowers who may be in a good credit position or for bad credit cardholders as well. Yet, when various credit card debts are in place, many consumers have turned to consolidation loans as a way to handle multiple credit card debts which could be causing trouble. Many see credit card consolidation loans for traditional credit card debt or bad credit consolidation loans as a way to better manage multiple debts as a consolidation will only require one monthly payment and come with one interest rate.

However, cardholders are also turning to credit card balance transfers as a way to consolidate multiple credit card debts, as many credit cards with a balance transfer option will offer low introductory rates or a low interest rate to begin with, which again, many cardholders see as beneficial for their situation. Obviously, credit card debt consolidation for traditional or bad credit borrowers may be accomplished in various ways, but some consumers worry about getting a debt consolidation loan or using other assets as a way to consolidate credit card debt, and as a result, use these cards with balance transfer options for their consolidation needs.

Yet, many advisers often caution consumers against rushing into a balance transfer credit card offer as they are not always available, in a cardholder’s best interest, or may not be beneficial even if an opportunity is offered. Typically, balance transfer credit cards will offer a low introductory interest rate, which many have used as a way to consolidate debt and promptly pay off what they owe without acquiring additional costs related to interest.

However, for bad credit borrowers as an example, a balance transfer offer on various credit card debts may either be unavailable or come with a higher interest rate. Obviously, transferring numerous debts onto one card may also be problematic in that balance transfer options for certain credit cards may not offer a credit limit which will allow a cardholder to consolidate all of their debt.

While some cardholders who may have a good credit score can use a balance transfer credit card to their advantage, these balance transfer cards are no guarantee when it comes to affordability or help with consolidating debt. Also, the problem many financial advisers have with credit card balance transfers is that it can lower a consumer’s credit score until they begin repaying these debts on their balance transfer card.

Typically, cardholders who have benefited from using balance transfers on credit card debt are those who were able to quickly combat the consolidated debt before a balance transfer card’s interest rate increased or before acquiring additional debt, which could obviously cause further difficulties. Consumers may benefit from credit card balance transfers when they need to consolidate credit card debt, but advisers always point out that simply moving debt around is not the same as erasing debt, so consumers who have chosen to consolidate with balance transfer cards typically have benefitted only when they focused as much funds as they can on paying down the balance of the credit card transfer.