It may seem slightly odd for someone trying to consolidate debt to get another line of credit. After all, credit cards make it easy and convenient to spend money. This money doesn't even belong to the person using the card and they can get into more unwanted debt. To a large degree this is true however if used correctly, a low interest credit card for debt consolidation can actually help to solve your financial problems. This article will show you how this can be done.
Credit cards earn a lot of money for banks and financial institutions. They are crucial to the banks success and thus plenty of thought goes into coming up with new products. A credit card with a good repayment rate or a unique incentive may get more people to take the card. A common incentive is air miles for a purchase. This could appeal to many people but most likely to people that do lots of overseas travel - business people for instance.
In terms of people with financial problems the low interest credit card with a balance transfer option is probably the most appealing. The main aim of such a card is to transfer your existing credit card debts to this card. Depending on the card you go for, you will have a period of time where you don't have to pay interest on the transferred debt.
Your focus should now be on paying all or as much of this debt off within the specified time period. This will save you money on interest repayments and it will drive you to pay off your debt problem. It will also make it easier to manage payments as you will only have to find one payment per month rather than many from numerous cards throughout the month.
Of course, the one important assumption that seems to pass many people by is that you will work towards paying off the debt. If you think that no interest for six months gives you a six month vacation from your debts then you are approaching the low interest credit card for debt consolidation from the wrong direction.
So in reality, you don't really need a low interest credit card for debt consolidation. You could try to get some other form of credit, like a bank loan instead. A bank loan will probably have a lower repayment rate than a credit card. However it is unlikely to have a 0% repayment rate for the first six months.
However, it is essential that you can repay the debt within the six month introductory period. Otherwise, you may find that a low interest credit card with balance transfer will not save you money by comparison to a bank loan or an equity withdrawal on your mortgage. the interest rates would not stack up by comparison to these types of loans after six months.
With this said, another reason why a low interest credit card may be appealing is that it would probably be a lot easier to get than a bank loan. Provided you stay focused on clearing your debt a low interest credit card with a balance transfer facility can be an effective way to clear your debts.
BankFirst focuses on the prepaid credit card market, and has a reputation for integrity and solid financial strength. They offer a variety of options, and have cards specifically designed to help cardholders build or rebuild their credit ratings. Here are five tips to help you choose the best BankFirst credit card for you:
1. Know your credit card goals and habits. Give yourself an honest assessment of your spending and payment tendencies before choosing a card to apply for. Are you likely to use the card frequently or just for emergencies? Do you have a plan for raising your credit rating or do you just need a card for things like online purchases and travel reservations? What fees and payment terms fit with your finances?
2. Consider what kind of card will serve your goals best. Once you know what your goals and needs are, you can look at the options available and figure out how each option fits with what you want to accomplish. Then you can look at only the cards that actually serve your needs.
3. Consider which features are most important to you. Many of BankFirst's prepaid credit cards offer the same sort of extra features as regular credit cards, such as cash back or other rewards on your spending. These features can be very attractive, but make sure you are looking at the cards that fit your most important requirements first.
4. Compare all of your options carefully. It can be tempting to just apply for the first credit card offer that catches your eye, but there's no way of knowing if it's a good offer until you compare it to others. By carefully evaluating all of your options you can often save money and improve your credit card experience.
5. Read the fine print. Always be careful to read and understand all of the terms that apply to a credit card offer before applying. Consider the fees, payment terms, and extras will actually work and how they will affect the way you use the card.
Both Adrian Fletcher & Beth Derkowitz are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.