The Right Balance Transfer Credit Cards Have the Potential to Improve Your Debt Situation
When you apply for a mortgage loan, the creditor considers your credit score and your credit report. Bad credit will affect your ability to secure an affordable mortgage. You could be denied a mortgage, or you could receive sub-prime rates, which come with a higher interest rate because you’re considered high-risk. If you’re struggling to make your credit card payments on time, consider the benefits of a balance transfer credit card. A balance transfer card can reduce your interest costs significantly, which should help you pay off your balances faster. Over time, this will reflect positively on your credit report and if you’re patient and diligent, you will eventually be able to take advantage of prime mortgage rates.
A Smart Solution to Manage Debt
“Sometimes the best way to start making a real dent in that debt is to open another credit card,” reports BankingSense, a financial blog. “Yes, you read that correctly, although it sounds a bit strange that opening a new card would be the path to paying down debt. However, given that many new cards offer a 0% balance transfer that you’re not required to pay any interest on for at least 12 months or more, it’s actually a very smart solution to manage your debt.”
Balance transfer cards should be used responsibly. This solution isn’t right for everyone, and it has its drawbacks; however, when used responsibly, balance transfer cards can be a very effective means of rebuilding credit. You’re eliminating high-interest rates and freeing up credit on your other card. These things will help you manage debt and improve your overall credit score.
Choose a 0% Card to Eliminate Fees
Don’t settle for a balance transfer card that immediately begins charging interest. There are plenty of cards that don’t charge interest for the first six months to a year. These 0% cards allow you to make a significant dent in the balance; in fact, if you’re looking to pay the card off, you can make larger payments and pay it off before the 0% offer expires. You’ll never pay a dime in interest fees.
High-interest fees get added to your debt every month, which can make it seem like you’re caught in a never-ending debt cycle. Not all balance transfer cards offer the 0% introductory rate, but the best ones do. If your score isn’t high enough to take advantage of this offer, do whatever you can to raise it the points needed to secure one of these cards.
Consolidating Frees Up Credit and Can Improve Your Score
Consolidation frees up credit, which can impact your score positively. The card whose balance you transferred will have open credit, which has the potential to look good on your credit report. Don’t make the mistake of maxing this card out again, but rather hold onto it and let its open credit positively affect your credit score. If you’re worried you’ll be tempted, freeze the card or cut it up.
Who is Eligible?
You’re eligible for a balance transfer card if you meet the following qualifications: (Please note, all credit card companies are different; these qualifications are simply guidelines)
- You have fair to good credit (some companies will approve people with bad credit)
- You’re not behind on your credit card payments
- You earn more than your current debt situation
If you want prime mortgage rates, your goal has to be to pay down debt. Once you’ve raised your credit score, you can secure a more affordable mortgage. A balance transfer card may be the solution to help you get out of debt faster; as well as reduce your monthly payments. Overall, these cards significantly reduce the money you spend on interest, so you can apply those funds to the actual balance and get out of debt faster.