Get the credit debt monkey off your back

Credit card debt is a monkey we’d all prefer to keep off our backs. The sad truth is that some of us are more successful at keeping the monkey at bay than others.

To help conquer debts, some providers may entice credit cardholders with the appealing prospect of a credit card balance transfer.  While this strategy has some merit, it might be worth talking to your existing lender before making a move.

Balance transfer

A credit card balance transfer involves shifting your existing credit debt to a new credit card offering a discounted interest rate (or even a zero interest rate) on the transfer balance.

Typically a credit card balance transfer comes with a honeymoon period of between 6 and 12 months, depending on the provider. After the honeymoon is over, the credit card reverts to a higher variable rate.

A low-rate credit card balance transfer can help you overcome your debts, though be sure to choose the offer that matches your budget and your circumstances. There may be little value in choosing a credit card charging 0 percent for six months if you really need 12 months to make a substantial dent in the outstanding balance.

Help is at hand

If you are battling to harness your credit card debts, it is important to realise that you’re not on your own. Before choosing a credit card balance transfer, it’s often worth speaking to your current provider first. If you prove to them you’re prepared to stick with a budget, they might be open to negotiating a repayment plan that helps you out of your financial pickle.

Consider consolidating your debts into one                                          

Rather than a credit card balance transfer, consider consolidating multiple high interest debts into a single debt such as a home loan or personal loan, which often charge lower interest rates than some credit cards. This can make your credit debt more manageable while providing lower repayments that are easier to budget for.

Conversely, this strategy works on the proviso that you can beat the urge to reload your credit card with new purchases.

Credit card debt can put a dampener on the best occasions but you can get the monkey off your back and start living debt free by conducting your own research. Get started by comparing some of Australia's most competitive credit cards using the RateCity comparison tool.

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