The balance transfer option is a very good move to go for if you are neck deep in credit card debt. You might feel there is no escape for you from the predicament that you have put yourself into, but there is no need to panic. Panicking is not going to serve any purpose other than making you disoriented and unable to take any decisions. There are a number of ways to get out of credit card debt and back to a normal life. We shall discuss one such a way of getting rid of credit card debt.
Balance transfer is a practice of transferring an outstanding balance from an old credit account onto a new credit account in order to buy more time to make a payment. It can also be done in order to reduce the interest amount that is being paid on a certain principle amount.
In order to make a balance transfer successful, there are a number of things to keep in mind. Firstly, the interest rate on the new credit account must be lesser than that of the old credit account. Only then will it be financially beneficial for you to make the transfer. But in certain cases, the only reason that the balance transfer is being done would be to buy more time to make the payment. In such cases, it does not really matter how much the interest rate is on the new credit account as long as it gives you an interest free period during which you will not need to make any payments at all. But do be aware that when the interest free period expires, you will still have to make the payments that you owe the bank.
Another thing to keep in mind is that you must not use the new credit account as soon as you open it. You will be tempted to do so given the fact that there might be a lot of rewards and other offers being made by the bank since it is a new account. But again, you need to realize that you will first have to clear your outstanding balance before you go ahead with any new purchases. Never live your life on debt. Try to pay off all your debts as soon as possible so as to be financially free.
And make sure that you do not close the old credit account. By doing so, you will increase your debt to credit ratio. This ratio will directly affect your credit score. Hence it is important to make sure that you have many credit accounts open but at the same time do not use those accounts to borrow in order to make purchases. Living life on borrowed money will always lead to complications. Live within your means and pay off all your debts in time. a credit card must be used as a convenience and not a necessity, it is only when you fall into the latter category that you will end up in debt.