Locking in a balance transfer can save hundreds in interest charges as it involves moving the balance that attracts two-digit interest charges to a new debt avenue (usually a new credit card) at a phenomenally low interest rate, sometimes even at 0% interest! With most credit instruments, the debtor usually ends up paying a huge amount of interest often finding it extremely difficult to pay back the borrowed amount and this is where locking in a balance transfer can save hundreds in interest charges, thereby reducing the debt burden to manageable proportions.
An alternative to locking in a balance transfer is asking your credit provider for a reduction in the interest rate being charged. It works out cheaper however, your current provider may not reduce the interest more than 3% or 4%, which is still better though not the ideal situation for someone who owes a lot of money by way of accumulated interest charges. This is where you can rescue yourself by locking in a balance transfer and save hundreds in interest charges.
As such locking in a balance transfer would mean you pay off more of your debt amount principal rather than struggling with the payment of the interest charges. Locking in a balance transfer is definitely a faster mode of debt repayment for someone with an intention to become debt-free.
Locking in a balance transfer is almost as easy as it sounds provided you bear in mind a few important points.
• Balance transfer offers usually come with a “limited period” clause. Locking in a balance transfer is a good idea if you’re sure of repaying within the offer period. If you defer repayment until the standard rate of interest is applied again by the new credit card, you’re going to be in as much debt as you were before.
• A new credit card with more credit limit available may tickle your spending instincts all over again. Refrain from spending too much until you clear off a major portion of the debt already incurred. Operate your expenses on a strict budget and you’ll be surprised at how quickly you can get out of debt and consolidate your financial position!
• Do not make the mistake of moving to a new credit card for locking in a balance transfer and then proceeding to close your old credit card account. You could have a negative affect on your credit scores by closing the original account.
• An important fact to check before locking in a balance transfer is whether the new card is powered by the same provider as your old card. The brand names could be different but the provider might still be the same. You’ll be unable to avail the lowered interest rate offer for balance transfer due to your existing credit history!
Locking in a balance transfer is an effective way to pay down your debt. It can guarantee savings on interest charges on your existing credit card. Scout around for good offers and if you can find a zero percent interest credit card balance transfer offer, you could potentially be saving a good amount of money. If you’re serious about repaying your debt with immediate savings, locking in a balance transfer can save hundreds in interest charges.