As a debt solution, there is no doubt the effectiveness of balance transfer. However, like other debt relief options, you have to understand the whole process in order to benefit from it entirely. To help you with that, we will discuss in detail what balance transfer is all about and how you can guarantee that it can successfully provide you with debt relief.
Balance transfer, as the name implies will involve transferring your balance into a new account. This account is usually a credit card that is offered with zero interest. Do not get your hopes up with the zero interest because that will not last forever. It is just an introductory promo that has a minimum run of 6 months. It can take a year but that will depend on the credit card company.
Before you can transfer your balance, you need to be aware of the fee that you have to pay the new account. It usually varies but you can expect it to be around 3% of the amount that you will transfer. That is practically the only fee that you will have to pay to enjoy the introductory promo benefits.
The challenge in balance transfers will be maximizing the benefits of the zero interest period. You have to take advantage of this because any payment that you will make towards the debt will pay off your principal amount. No interest will be added despite the balance that will be carried over to the next billing cycle.
So to make this debt solution really effective, you have to maximize your debt payments. This can be done in two ways.
One is by living a frugal life. By cutting back on your expenses and spending only on the bare basic necessities, you can maximize your debt payment fund. A frugal budget may seem like the extreme but remember that you only have to do it for a short time. You should be able to make the sacrifice for a couple of months so that you can pay down your principal debt.
Another way to increase your debt payments is to grow your income. Get a second job or set up a passive income business. Most online ventures will not cost as much as their physical counterpart. All you need is a stable internet connection and a computer. Online stores will not be as expensive as a physical one and you can leave it open 24/7. If you set up an automated one, you don’t have to tire yourself too much managing it.
Getting an online job will also allow you to increase your income without having to spend too much time away from your family. Or you can use your hobby to earn money. If you love gardening, you can grow your own produce and sell whatever you and your family cannot consume. Offer to make furniture for your neighbors.
These are only a few of the concepts that you can implement if you want to maximize the benefits of balance transfer. You have to sacrifice for a short while because once the promo period ends, you can expect that the interest on the card will go to its intended high rate.