Many experts believe that interest rates will rise as the year comes to a close. For some Connecticut consumers, that could mean a significant uptick in their credit card debt payments. However, it's possible to lower your rate before that occurs. Balance transfers, when used responsibly, can be a powerful tool for debt management.
Credit card companies are happy to compete for your existing credit card debt. They might offer a low or zero percent interest rate for a set period of time. If you transfer your debt onto the new account, you can save the interest fees during that span of time, which can help you to find a long-term solution.
It's important to fully understand all aspects of an offer before signing on the bottom line. One thing to check is where the interest rate will be once the welcome period is over. If the debt will end up costing you more in the long run, then a balance transfer might not be the best idea.
Be wary of offers to reduce your monthly payment after a balance transfer. Lower payments simply mean that your debt will continue to grow. If the end goal is to pay off the balance as soon as possible, then make every effort to put as much money toward your balance as possible.
Used judiciously, a balance transfer can be an effective debt management tool. To make the most of this opportunity, understand the terms before signing on, and pay down the balance as swiftly as possible. Many Connecticut residents have moved beyond untenable debt levels through this and similar tactics.
Source: Forbes, "3 Strategies To Deal With Credit Card Debt In A Rising Rate Environment", Nick Clements, Dec. 4, 2017