There have been many credit cardholders who have used credit card balance transfer opportunities as a way to consolidate multiple credit card debt, but there is some argument as to whether debt consolidation through a balance transfer is in a cardholder’s best interest. Obviously, many people switch credit cards simply as a way to acquire a lower interest rate, but when a credit card allows a consumer to transfer balances on multiple credit cards, many cardholders feel that this can be a more affordable option to their credit card debt situation.
There have been reports about new methods for credit cards which are being implemented by lenders, and offers for balance transfer cards are one of those new trends which are being used as a way to attract customers. Obviously, consumers who see that a credit card balance transfer opportunity may offer them the chance to consolidate credit card debts onto a card with no interest rate or a low rate for an introductory period, this can be quite appealing for anyone who may have credit card debt associated with a high interest rate.
However, advisers often caution cardholders against balance transfers as these cards can create a situation where the cardholder will be either holding a line of credit on which they will spend more money than had they simply combated their credit card debts separately. There are cases where consumers have turned to balance transfer cards as a way to begin erasing various credit card debts at a low interest, or again no interest rate at all, but when poor financial practices are implemented in this situation overall costs can skyrocket.
Those who have properly used balance transfer cards in a way that was beneficial for their credit card debt situation have been cardholders who consolidated their credit card debt in the hopes of finding credit card debt relief through this balance transfer opportunity, but have begun focusing as much money as they can on erasing the principle on this card. Some consumers have made the mistake of either meeting minimum monthly payments and, as a result, the introductory period which offered them a low interest rate has ended and a higher interest rate may now be associated with their card.
Also, there have been consumers who have continued to acquire debt after transferring various balances onto one card, so advisers often make it a point to explain that a credit card balance transfer to consolidate debt does not truly erase debt, meaning cardholders are not free to begin acquiring debt on other cards as well.
Obviously, there have been mistakes made by consumers which have been detrimental to their financial health, but if a consumer chooses to consolidate debt on a credit card with a balance transfer option, care must be taken so that this principle of consolidated debt will be erased as quickly as a consumer can afford and alternative debts will not be acquired during this process.