Christmas debt hangover: Consolidate with a credit card

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Jeannie Messer reports on the best options to reduce your credit card debts for your New Year’s resolution.

December 1, 2009

If the silly season has left you feeling not so comfortable and not so relaxed about the credit card bill you’re about to receive, remember, the New Year is an ideal time for taking stock and looking forward. So why not make getting on top of your credit card debt your New Year’s resolution?

Debt consolidation is the easiest way of reducing your credit bills. A balance transfer credit card is probably your best option, giving you a lower interest rate for a set time. Many lenders offer 0 percent six-month transfer deals. Some also offer 12-month deals with rates of between 3 and 7 percent.

While introductory rates are an attractive deal, as with all honeymoon credit cards, outstanding debt at the end of the introductory period reverts to the standard rate.  If it’s much higher than your existing rate, you may not be better off unless you intend to reduce your debt significantly during the low-rate period.

If you think you’ll need more than six months to pay off your debt, think about a 12-month offer or life time balance transfer. There are several cards that offer lifetime transfers with a better standard rate than some intro rates and can include frequent flyer miles and a range of rewards or incentives.

Before you sign anything, consider all your options carefully, including checking out other standard low interest credit cards. With a disciplined, common sense approach, however, the interest free period offered by balance transfer credit cards is a good opportunity to pay off your debt and take control of your finances for the New Year.

Just remember:
•     A honeymoon credit card is only a good option if you manage to pay off the balance in the introductory period
•     Try not to make new purchases with a balance transfer credit card – your payments go towards the 0 percent balance until that debt is discharged leaving new purchases to accrue interest at the higher rate
•     And make sure you understand all the terms and conditions.

If you stick to these simple rules, consolidating your debt to a balance transfer card will help this New Year’s resolution and make Christmas 2010 a truly stress-free one.
Happy consolidation!


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