How to compare balance transfer credit card offers to decide what is the best credit card to consolidate debt.
What is The Best Credit Card to Consolidate Debt?
Balance transfer credit cards can be an effective way to consolidate high interest rate credit card debt. But what is the best credit card to consolidate debt? Should you go for a credit card that offers 0% APR for a short amount of time or low APR for a longer amount of time? Consolidated Credit’s Financial Education Director explains how to determine if you can afford the monthly payments during a short 0% APR period. Paying off debt interest-free is usually the best option, but only if you can afford to keep up with the payments. Otherwise, low APR is the way to go.
[On-screen text] Ask the Expert: Is it better to consolidate debt with a 0% credit card or a low interest rate credit card?
April Lewis-Parks, Consolidated Credit Director of Education: A reader asks, “Is consolidating with a 0 percent interest card better or worse than consolidating with a low interest rate card?” And the answer to this question on whether or not you should get a low interest rate card or zero interest rate card really depends on your ability to pay it back in time.
[On-screen text] Can you pay off debt before the 0% ends?
April Lewis-Parks: If you can pay back the zero percent rate card before the promotional period ends, that’s great.
[On-screen text] Amount borrow divided by 11 = monthly payment amount
April Lewis-Parks: And to determine this, what you do is you take the amount you’re going to finance divided it by eleven and then that’s the amount you have to pay every month to pay off the debt before the promo period is up. Often times, expenses and surprises happen during the year and that will throw off your budget. So, if you’ve budgeted in to pay it off a month early, you’re safe.
Now, if you cannot afford to pay that amount every month to pay off the debt, then look at the lower interest rate that has a longer period of time before it expires.
[On-screen text] The lower rate card should have a longer teaser rate, allowing you more time to pay back the debt.
April Lewis-Parks: A lot of those offers are 18 months to 24 months. Take that offer if you need more time to pay off the debt.
[On-screen text] Consolidated Credit; When debt is the problem, we are the solution. Call Now 1-888-995-0737 or go to www.consolidatedcredit.org
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