Debt Consolidation Credit Card

Debt Consolidation Credit Card

Ask anyone who has used a credit card to consolidate their debt, and they’ll likely tell you that there really isn’t a greater feeling than playing the interest rate game with the credit card companies…and winning! That’s because debt consolidation credit cards help make interest work for borrowers, instead of the other way around.

Historically, before the advent of the debt consolidation credit cards, borrowers were faced with the ultimatum of being anchored to a particular credit card. So if a particular credit card demanded a 20% per year interest rate, than borrowers were generally forced to accept this rate. True, they possibly had the option of taking out a personal loan at a lower interest rate, and use that cash infusion to pay off the credit card, but this was not a viable option for many borrowers. Debt consolidation credit cards have changed all that!

Now, by using a debt consolidation credit card, borrowers can transfer balances from higher-interest rate demanding credit cards, to lower ones. The savings of this single transfer can be hundreds of dollars a year, perhaps thousands. Of more importance, however, is that money that was previously being used to service debt can now be applied to the principal debt of the new, lower interest-rate demanding card. The bottom line for borrowers is that these debt consolidation credit cards can help lower overall debt.

Borrowers who take advantage of debt consolidation credit cards should, however, ensure that they pay close attention to the “fine print” of their balance transfer agreements. This isn’t to suggest that there are hidden traps with debt consolidation credit cards - because they’re typically aren’t - but that in most cases, there is an expiry date for a low or “introductory” interest rate.

For example, using a debt consolidation credit card that is pegged at a 7% interest rate may only remain at 7% for 6 months after a balance transfer. After this point, the debt consolidation credit card may rise to the level of the card that it replaced; or perhaps climb even higher!

This fact should not deter borrowers from analyzing if a debt consolidation credit card is the right choice for them. If it is the right choice, then it could save hundreds, if not thousands of dollars. And of course, there’s the priceless thrill of beating the credit card companies in the interest rate game!

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