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Do You Need A Low Interest Credit Card for Debt Consolidation

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Do You Need A Low Interest Credit Card for Debt Consolidation

The first thing that may cross your mind if you are in financial problems and trying to sort out outstanding debts is why do you need another credit card. Credit cards are all about convenience and are a service provided by financial institutions to their customers and, if anything, will only make you have more debts than reduce them. And to some extent this is true. This article will discuss why a low interest credit card for debt consolidation can help you sort out your financial problems.

The credit card industry is highly competitive so banks try to make better offers to potential customers and trump their competitors all the time. New incentives are dreamed up to encourage a certain niche to use their credit card. So air miles might appeal to business people that jet all over the place to hold meetings. Whereas credit or money back on clothing purchases may appeal to avid fashionistas.

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.

With this done, you should be determined to pay of the debts before the balance transfer introductory period is up. In this way, you will save money on interest payments. It will also help you to stay focused on paying off the debt because you know you will save money if you don’t hit the deadline. The debt payment will only be once a month too, making it easier to stay organized and not miss payments, as you may do with many cards.

This method will only work if you actively work to pay off the debt and stick to this plan without having a credit splurge. Many people think that putting the transferred balance on a six month interest free period means they don’t have to worry about it. This is not the right attitude and in six months the repayments will be causing plenty of concern.

So you don’t really need a low interest credit card for debt consolidation. You could try getting a bank loan instead. It would probably have a lower repayment rate than the credit card but it is not likely to have a zero interest rate introductory offer.

However, you have to pay off the debt within the six months or you probably won’t be better off. This is something you have to work out before you decide to get the card. Commit to paying off the debt and you will be better. If you think it will take 12 months to pay off the debt then it may be better to go for another option with a lower interest rate.

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.