Anyone who has ever owned a credit card will know just how easy it is to get into debt. Millions of people slip into the red every year, racking up debts that seem to expand through interest charges making them feel as if they have lost control.
However, there are a number of debt settlement methods that allow us to manage repayments while in some cases freezing any further interest until the credit card debt has been cleared.
It’s worth checking all of your options for debt settlement techniques, but one method that may not seem like the most obvious to begin with is by use of a credit card.
Credit cards are traditionally seen as a tool to fuel debt, but nowadays there are many different types of credit cards, each designed to help people to save money – from cards that reward users for using them as payment, to cards that allow you to move your debt to and pay 0% interest for an introductory period.
Balance transfer credit cards come with 0% interest durations for anything up to 20 months, allowing you to set up a debt settlement plan in order to clear the debt within the interest free period.
There is a small transfer fee to pay that is added to your balance (usually around 3% of the balance transferred), but this fee is tiny compared to what you will be paying for a standard rate – not forgetting that your rate is per year, whereas the transfer fee is a one off.
For example, if you transfer a £1,000 debt from a previous credit card to an 18 month 0% balance transfer card with a transfer fee of 3%, you can spread your balance (£1,030 after the transfer fee) over the 18 month duration (around £57.20 per month) and be debt free without paying any unnecessary interest.
Now lets say your previous card had an APR of 16.9%. If you paid the same amount off each month it would take you 21 months to settle your debt – costing you over £170 more.