Consolidating Your Debt On A Credit Card Can Be Wise Financial Management

We’re continually being told that the UK is a nation of debt junkies and that we’re all one step away from bankruptcy. We’re also continually being told that most of our unmanageable debt is credit card debt –the worst form of debt you can have as it pays the highest rate of interest and fees. So how is then that consolidating your outstanding debt, including any personal loan debt you may have, on a credit card could actually work in your favour?

0% interest

The answer to the above question is in the many magical 0% interest credit card offers available. Prior to the mid-1990s, no mainstream UK credit card provider offered 0% interest. Indeed, most offered excessive annual percentage rates. As such, as a mind set, we have conditioned ourselves to believe that credit cards are bad and that having credit card debt is to be avoided, if at all possible. However, if you take the time to investigate matters further, you may well find that it is more financially prudent for you to consolidate your existing debt on a credit card than it is to take-out a loan to repay this debt.

By taking advantage of a 0% credit card offer, you can transfer your existing credit card debt to a new credit card provider offering 0% interest on balance transfers. Provided that the term of the 0% interest is long enough for you to have a very real chance of repaying the credit card debt you have, there is every chance that you’d save money doing this rather than taking out a personal loan to consolidate all of your credit card debt. The logical reason why this would the case is because you’ll need to pay interest on the personal loan, but you’ll be paying no interest on the 0% credit card promotional balance transfer scheme.

Things to watch-out for

Having said taking advantage of a 0% interest credit card could be a very wise way to consolidate your debt, you do need to keep a couple of issues in mind.

First of all, you need to know that there is a very real chance that you’ll be able to repay the debt within the time the 0% promotion is given, as the interest rate the credit card will revert to after the promotional period is likely going to be much higher than a standard loan. Even here, however, you may want to consider taking advantage of the promotional 0% interest credit card, then taking out a loan near the completion of the promotion period to repay the card. Hopefully doing this would mean that you reduce your consolidated debt significantly enough to mean the interest you pay on the loan is minimal.

The second thing you need to watch-out for is to make sure that you comply with the terms of the promotional 0% interest credit card offer, otherwise you may find that the card provider reverts back to charging you the standard interest rate applicable to their issued credit cards. If this were to happen, it could end up costing you a lot of money! So make sure you make your repayments in time and that you keep up-to-date with the terms of the card.

The last thing you need to keep in mind is that not everything you are told is true! Sometimes it is possible to make credit cards work for you. Consolidating your debt on a 0% interest credit card may well be one of those times.

More Information:

• Debt Management and Consolidation
  These days, credit is so easy to get access to, is very easy to simply take on more than you can handle and let it get out of control very quickly.
• Quick Balance Transfer Guide
  Balance transfers allow card holders to transfer the money they owe to their existing credit card to another, usually at a special rate of interest. The new credit card company pays off the old credit card debt and transfers it to the new card. This article will tell you how to play the game.
• Causes and Cures Of Credit Card Debt
  For some, credit cards can prove a temptation too far, and soon they find themselves in debt. Simple precautions will keep the savvy card holder from such dangers.
• Tips On How British Women Can Climb Out Of Their Growing Credit Card Debt
  More women in the UK are spending money on credit cards than at any other time. In percentage terms, there are now more British women spending more each month than they earn.