There have been credit cards made available for a variety of cardholders, which may range from either individuals with excellent credit to even men and women who may have a bad credit score, that can offer debt consolidation options through balance transfers, as there are benefits for this particular use of credit cards being seen by consumers. However, there are some men and women who are jumping at the opportunity to acquire a credit card that may offer balance transfer debt consolidation options as there are reports that more major financial institutions are beginning to loosen their credit card practices, but these options may not always be in a cardholder’s best interest.
Understandably, when consumers can properly use a credit card balance transfer to consolidate debt, it can be helpful for those who may have multiple debt obligations at a wide range of interest rates, which could cause the overall costs they pay to become more excessive than had they used debt consolidation properly. Ideally, consumers who have considered balance transfer credit card options in order to consolidate their debt are those who would be able to compile multiple debts onto one credit card, which may offer either an affordable interest rate or 0% interest for an introductory period. While these options will vary depending on a consumer’s credit situation and history, men and women may be able to pay off multiple debts after they have consolidated these obligations and do so without meeting interest payments.
However, there are some concerns by financial advisors that cardholders may make mistakes when looking at these balance transfer offers. An article by Odysseas Papadimitriou on WalletBlog.com states that some consumers may make the mistake of misunderstanding exactly how a balance transfer works and, as a result, “…it is important to check your credit card application’s fine print before making a balance transfer in order to see how much it will actually cost.” Some of the problems that cardholders may face when using a balance transfer option will come in the form of either fees that may be associated with transferring balances onto this card or being unable to pay off the consolidated balance before the introductory period ends and their interest rate rises.
Some consumers may avoid these problems by simply focusing as much funds as they can towards this credit card and not acquiring additional forms of debt on their balance transfer card or other credit cards while they are attempting to repay this debt consolidation option, but there have been consumers who have not practiced these smart financial habits and have either been unable to fully benefit from a credit card that will offer debt consolidation options or in some cases they have simply found themselves in a worse financial position.
When any form of debt consolidation is used, consumers are often prompted to look at the repayment timeframe, the ability to repay a consolidated debt beyond minimum monthly payments, and of course the interest rate that will be associated with a particular type of consolidation. Credit cards that offer balance transfers may bring either 0% for cardholders, in terms of the interest they will pay, or for some consumers who may be in a bad credit situation, this type of card may simply alleviate their monthly financial obligation, even if a higher interest rate might be the only option. However, consumers must simply calculate any additional costs for transferring balances and be sure that if they consolidate debt in this manner they can pay off what they owe before a higher interest comes into effect and avoid excessive and unnecessary costs.