There have been cardholders who have looked to take advantage of balance transfer offers on credit cards which will essentially allow them to consolidate multiple credit card debts onto a single card and, hopefully, begin finding debt relief by erasing this consolidated debt and only combating one interest rate. Also, balance transfer interest rates have been offering very low introductory rates or 0% interest on some cards, which is obviously a major draw to cardholders looking for some form of credit card debt relief through consolidation.
Yet, current credit card balance transfer rates averaged 15.91%, according to Bankrate.com, and it’s for this reason that advisers often caution cardholders who are considering a balance transfer credit card to be wary that introductory rates obviously never last and, despite being incredibly low, can cause financial trouble down the road. Obviously, there have been consumers who have consolidated various credit card debts onto one balance transfer card and have formulated a repayment plan that allowed them to erase all of or the majority of their debt before a rate increase occurred.
However, there have been some cardholders who had either consolidated debts on a balance transfer card and, on other credit cards, continued to acquire additional debt while making payments on the credit card balance transfer, but when the introductory rate ended, these cardholders found themselves combating a high interest rate and struggling with debt once again.
Ideally, cardholders will use a balance transfer credit card group all of these various debts onto one card and then focus as much money as they can on erasing the principle on this card, while the introductory interest rate is still in place. Cardholders who can erase the principal balance on their transfer credit card can do so at, in some cases, 0% interest, which obviously can save a substantial amount of money on the overall costs a consumer must meet.
Yet, taking advantage of a balance transfer credit card will only be beneficial to cardholders who can budget properly and focus as much money as they can towards repaying this consolidated debt before their interest rate increases, all the while, avoiding acquiring debt on other sources of credit cards. Responsible cardholders have, again, been able to benefit from these low introductory rates on balance transfer cards, but it will take planning and smart repayment habits before a balance transfer credit card will be beneficial for most consumers.
Obviously, some consumers may be able to consolidate various credit card debts onto a balance transfer card, but they may also realize that they simply cannot afford to erase the entirety of this transfer balance before the introductory interest rate ends, and it’s at this point that consumers must calculate whether continuing to pay cards separately versus meeting a higher interest rate on some of this consolidated debt associated with the balance transfer card will be most affordable for their situation.