Debt consolidation program – How to consolidate debt in 7 steps

Do you have more debts than what you can handle? Are you having a hard time managing multiple bills? Will you feel much better if you have to make only one payment to creditors every month? If your answer is ‘yes’ to all the questions, then you can enroll in a debt consolidation program. But before you enroll in the program, let’s find out how to consolidate debt and who offers the best debt consolidation programs.

What is a debt consolidation program?

A debt consolidation program combines unsecured debts like payday loans, medical bills, and credit cards into a single monthly payment plan at a low-interest rate and an easy debt relief plan. In most cases, debt consolidation services are offered by debt consolidation companies. You make a single monthly payment to a debt consolidation company and they distribute it among your creditors. The process continues till you pay back all your creditors.

Read: Can debt consolidation be useful to you?

How to consolidate debt in 7 simple steps

In a debt consolidation program, you can consolidate debt in 7 simple steps, and those are:

  • 1. Pen down the number of debts you have along with the interest rates.
  • 2. Calculate how much you can pay on your debts after evaluating your budget.
  • 3. Sign up with a debt consolidation company.
  • 4. Complete all the formalities and enroll in the debt consolidation program.
  • 5. Explain how much you can pay every month to the debt counselors.
  • 6. Wait patiently and let debt counselors negotiate with your creditors.
  • 7. When debt counselors and creditors reach an agreement, start making monthly payments (which includes the debt consolidation fee) until you pay your bills completely.

What are the various types of debt consolidation programs?

In this country, you can enjoy 3 types of debt consolidation programs and these are:

  • Credit card debt consolidation programs where you consolidate your credit card bills into a single monthly payment plan.
  • Payday loan debt consolidation programs where you consolidate cash advance into an affordable repayment plan.
  • Medical debt consolidation programs where you merge unpaid hospital bills into a lower monthly payment plan.

Debt consolidation programs – Pros and cons

Pros of debt consolidation programs Cons of debt consolidation programs
You have to make one payment to one source every month You could spend more if the tenure of the program is too long or the fee is high
You have to manage only one bill You can get scammed if the debt consolidation company is fraudulent
You can save money on interest rates, late fees, and penalties
You can simplify your finances
You can eliminate debt fast

Who offers the best debt consolidation programs near me

  • Debt consolidation companies having proper accreditation and affiliation.
  • Debt consolidation companies having an affordable fee structure.
  • Debt consolidation companies that know the state and federal laws properly.
  • Debt consolidation companies having good track records and success rates.

See also: Multiple debts? 9 Ways to choose a great debt consolidation company

Debt consolidation program vs loan – Which one is a better option?

Debt consolidation programs roll high-interest unsecured debts into an affordable single monthly payment plan. When you sign up for a debt consolidation program, the debt counselors negotiate with your creditors for a payment plan with a low-interest rate. They talk about the financial problems you’re in and request them to cut down the interest rate on your bills.

Debt consolidation loans work in a completely different manner. With a debt consolidation loan, you replace your existing debts with a new loan at a low-interest rate. This means you pay off your existing debts with a new loan to save money. The new loan has fresh terms and conditions. So you may get more time to pay off the debt.

Now, the main question is, which one is a better option? A debt consolidation program or a loan?

According to many people, a debt consolidation program is better than a debt consolidation loan due to the following reasons:

  • It’s easy to qualify for a debt consolidation program. All you need to do is submit a few documents and pay the debt consolidation fee. However, in case of a debt consolidation loan, you need a good credit score and assets to be eligible for it.
  • When you look into debt consolidation for bad credit, a program is a good option for you. There is no credit check in case of a debt consolidation program. However, in case of a debt consolidation loan, lenders check your credit report and score. They determine the interest rate on the basis of your credit score. If you have poor credit, be prepared to pay high-interest rate on the debt consolidation loan.
  • You may lose your assets in case of a secured debt consolidation loan where you have to pledge collateral against it. If you fail to pay off the new loan, then lenders can seize your assets. You can’t do anything.

Is there any alternative to a debt consolidation program?

The decision to eradicate debt is much like the decision to shed those extra pounds from your body. The sooner you get started, the better for you.

Debt consolidation helps you to merge multiple debts into a repayment plan as per your convenience. However, if you have secured debts, then a debt consolidation program is not what you need. It won’t make your financial life easier. In this case, you might need to look at refinancing or bankruptcy as your way out.

If you want to cut the debt amount into half or more than that, then debt settlement is a good option for you. In this program, the debt negotiators bargain with your creditors for a lower payoff amount owing to your financial hardship. They try their best to settle your debt with a lump sum payment to creditors. The only negative side of debt settlement is that it drops your credit score since you’re not paying the full amount. You won’t face this problem in debt consolidation programs because you’re paying the full amount.

Here is the best debt settlement advice to consider prior to enrolling in the program.

Are you knocking off credit card debt the right way?

Are you knocking off credit card debt the right way?

Ultimately there are 2 ways to pay off credit card debts

(i) Pay off your debts in full. This means paying the full interest and principal.

(ii) Pay less than what you owe. This means keeping maximum amount in your pocket and paying the minimum amount to your creditor.

Now there are 4 ways to pay less than what you owe:

  • Debt settlement
  • Debt management
  • Credit card balance transfer method
  • Bankruptcy – Chapter 7 and Chapter 13

Debt settlement brings down your outstanding balance by more than 40%. The figure varies depending on the creditor and the overall amount.

Debt management pulls down the interest rate depending on your affordability.

Bankruptcy brings down your payoff amount through court’s intervention.

Credit card balance transfer method is a smart way of consolidating your debts. Here you can transfer your balance to a 0% interest credit card and pay off the outstanding balance within the introductory rate period. You can skip paying the high interest on your card.

There is yet another logical way to pay off your credit card debt. You pay a set amount on all your credit cards. Dedicate the remaining amount on the credit card with highest interest. It’s the optimal behavior.

The best and the most logical way to pay off credit card debt is to attack the card with the highest APR.

This process seems to be easy and practical right? But most people aren’t knocking off credit card debt in this way.

How are consumers paying off credit card debt?

A recent study on 1.4 million credit card holders having revolving balances revealed a few startling facts. The study was conducted to know how these people are splitting payments between credit cards. Are they splitting payments depending on interest rates or overall balance?


  • Debtors are allocating only 51.5% of their extra payments to the credit card with high APR. But the right way to pay off credit card is devote 100% of your extra payments to the highest interest credit card.
  • Only 10% of credit card holders are paying off debts the right way.
  • Debtors are evenly splitting their payments on credit cards irrespective of the interest rate and the number of cards in their hands.
  • Debtors are losing money on interest payments annually. Those who have 2 credit cards are losing $90 every year due to unnecessary interest payments. Those who have 5 credit cards are losing $327 every year for the same reason.
  • Top 10% of debtors with 5 or more credit cards are wasting $1000 every year due to improper allocation of payments.

Psychology behind the illogical consumer behavior

Some financial experts suggest debtors to pay off their smallest balances first for easy wins and motivation. But credit card holders are not doing that. What is the psychology behind it?

If you study all the payment models minutely, then you’ll realize that ‘balance-matching’ model describes the card holder’s peculiar behavior perfectly. In the ‘balance-matching model’,

“individuals match the share of repayments on each card to the share of balances on each card”

Suppose a card holder owes $12,000 on one card and $6000 on another one. He can afford to pay $1500 in a month on the 2 cards. There is a greater probability that the card holder will pay $1000 on the first card ($12,000) and $500 on the second one, irrespective of interest rates.

The psychology behind this behavior is that balance is the first thing that comes to mind when card holders think of credit cards.

The balance is shown at the top of the credit card statement in big prints. Moreover, individuals have a greater tendency to use “’matching’ heuristics in decision-making.” Card holders mostly make payments in relation to balances instead of interest rates. They are giving more importance to numbers instead of statements.

Most consumers don’t have any idea of where to start when they have huge credit card debt. They become clueless and thus start repaying debts in completely wrong order.

People are confused. They don’t know how their APR changes their monthly outstanding balance. This involves loads of calculations – daily rates, annual rates, daily balance, etc. It’s not that easy.

What is right and what is wrong?

Tough to say. Some financial experts recommend paying off the smallest debt first due to the emotional motivation. The psychological boost is a big thing for many debtors. Plus, this appears to be the simplest thing to do.

But is this the right financial move?

If you want to keep the maximum amount in your wallet, then this isn’t the best financial move. You should target the credit card with high APR and try to knock it off as soon as possible. Just look at the last part of the multi-page credit card statement. You’ll get the APR information there.

Use free online debt payoff calculators to figure out how much you can pay and save on your existing debt. Use this interactive APR calculator to figure out your yearly interest payments and other expenses. Apart from these calculators, you can use credit card payment calculator for eradicating your credit card balances.


Are you confused like most Americans? Do you want to pay off your credit card debt in the right way? If so, then call or make an appointment with a reputed financial company and get advice on paying off your debts.


Best debt settlement advice to consider prior to enrolling in the program

Debt settlement services are normally offered by a third-party organization who can help you to reduce your debts by negotiating with your creditors or debt collectors. You may also negotiate with the creditors and settle your debts on your own. But it also comes with some risks which may create problems for your finances.

Practically, you should usually avoid negotiating with your creditor to settle your debts less than you owe as settling debts may damage your credit score. That’s not all, you might have to pay some tax on your settled amount. In the end, you may notice that you have paid way more than you saved.

If you still consider a debt settlement program, it’s also important for you to do proper research to avoid debt settlement scams.

The sole purpose of this content is to provide you with tips and suggestion on debt settlement. But before discussing further, I would first like to explain the debt settlement process a bit.

How does debt settlement work?

Debt settlement normally lowers the amount of unsecured debts by negotiating directly with the creditor. On the other hand, it is an opportunity for the creditors to collect their unpaid debts as much as possible.

You can settle your debts best when you’re behind on payments. If you’re still current with your debt payments, there’s no logic behind starting a negotiation with the creditor. If the creditor is still getting the money on time, then why should they  accept a settlement offer?

So, you really need to be behind on your monthly debt payments for at least 3 months, if you want to initiate a successful debt settlement process.

Once the process begins, you have the option to make two basic types of settlement plans. In both cases, you will make the offer to your creditor to settle your debts on a lesser amount than you owe. But if you look closely, the payment strategy is quite different. Let’s have a look at the plans:

  1. A single lump sum payment – You can negotiate with the creditors and try to get them to agree for accepting a lump sum payment and settle the account. The amount is usually less than the total debt you owe to the creditors.
  2. A monthly payment plan – You may negotiate with the creditor and arrange a payment plan (usually 4 payments) which will give you several months to repay the debts.

The first option is normally more successful than the second one. Most of the creditors like to get the money as a lump sum payment, rather than getting it on small installments, on a defaulted debt. Typically, the creditors will agree to accept payments under a monthly payment plan if it really make sense to break the total payments over a short time .

You can get help from debt settlement companies, also called “debt relief” or “debt adjusting” companies. The companies will provide you with a debt settlement program to get you out of unsecured debts once and for all. They will get an authorization from you to contact your creditors on your behalf. After contacting, they will start negotiating with the creditors and make a better repayment plan.

Debt settlement companies will usually  charge you a fee, often a percentage of the amount saved by them on your debts.

Now let’s move onto the next stage. Here we will discuss some tips you should consider before settling your debts.

Best debt settlement advice to consider prior to taking help of settlement

1. Be proactive, stop waiting

Don’t wait for reaching out to your creditor until your account has been charged off. A charge off account means you are more than six months behind on your payments. A charged-off account is known to the creditors as an account which has less prospect of getting repaid again. But don’t forget, being charged off doesn’t mean that you no longer owe the debt.

You should contact your creditors quickly and initiate debt settlement. Stop waiting and plan a good settlement offer that the creditor can’t refuse.

If you contact your creditors soon with a positive approach, most of the them would agree to agree with the settlement offer. If you take too much time to ask them, there’s a probability that they might sell off your account to some third party collection agency for a lower value, and that’ll be considered as a loss. So, in this situation, creditors or lenders may do anything to avoid such a loss. So, chances are there that your settlement offer might be accepted sooner than you think.

2. Enroll in a settlement program together if you aren’t single

If you have a spouse or a partner, go and sign up for a debt settlement program together! It is the best debt settlement advice I can give you to maximize your savings. But, you must first consider these things:

  • Which one of you is just an authorized user on these accounts?
  • How much debt do you have alone?
  • How much debt is in your spouse’s name?
  • How much debt do you have in both of your names?
  • Does it make sense to settle both of your debts, or only one of yours is OK?

If you and your spouse have $60,000 in credit card debt but $45,000 of it is in your spouse’s name, it would be wise for you to maintain your payments instead of settling your debts.

This way, one of you will be able to maintain your good credit. So, if a situation comes where you need a better credit, before re-emerging from the effect of debt settlement, you’ll have a good credit record with you.

3. Don’t make an unrealistic offer

If your creditor is ready to accept your offer and allowing you to settle your debts through monthly payments, you must set the payments at a level where you can afford it financially.

When you start negotiating with the creditors, try not to set a debt settlement plan that is unrealistic.

Most of the time, debtors, who offered a big amount as monthly payments, are able to make only the first payment and then miss rest of the payments. As a result, they fail to carry on with the debt settlement payment plan. In such cases, the account may be referred to a collection agency.

4. Consider the estimated time of the debt settlement program

Some people might think that settling debts may take just a phone call to the creditor and a couple of months to complete the process. But this is not the truth. Negotiating with the creditors may take time. The creditor must accept the settlement offer and agree with the terms you are adding with the offer. Sometimes the creditor may also give a counter offer.

In the end, you and your creditor should find a common ground to agree with each other.

But, taking too much time to settle your debt may also increase the chances of a third party involvement.

Why? It is because while you’re negotiating for debt settlement, you’re already behind on your payments for at least 3 months. If you take more time, your creditors may become restless and transfer the account for collection. You might be sued if you are delinquent for 12 to 18 months. So as soon as you are ready to eliminate your debts through a debt settlement program, you should always check the approximate duration of it.

5. Rebuild your credit with proper planning

Debt settlement may harm your credit score almost as bad as bankruptcy. The exact impact on your credit score may vary depending on the other information on your credit report. But, if you have a FICO score more than 700, your credit score may get a blow between 140 to 160 points.

You need to stop your debt payments for 3 months (at least) if you want to join in a debt settlement program. Once you settle your debts, it’ll be reflected in your credit report as “paid settled”. You need to stop your debt payments for 3 months (at least) if you want to join in a debt settlement program. Once you settle your debts, it’ll be reflected in your credit report as “paid settled”.

In this situation, you need to stay calm and focused on rebuilding your credit score. There are some good ways to do the same:

  1. Check your credit report – Check your credit report on a regular basis from your 3 major bureaus. Dispute errors if you find any and try to remove bad items asap.
  2. Catch up on your delinquent payments – After settling your few accounts, try to keep up with your other credit accounts and make the  missed payments.
  3. Pay Your bills on time – If you are getting any new loan or credit cards, make sure to pay the bills on time and in full.
  4. Don’t close old credit card accounts – After settling your credit cards, do not close the accounts. Old credit accounts have a long payment history; use them to rebuild your credit.
  5. Maintain good financial habits – Track your spending and prepare a suitable budget to allocate your money in different categories. Avoid excessive shopping and use cash rather than a card. Increase your retirement fund 401(k) whenever you have money in your wallet.

Can you settle debt and save credit? Here’s how to do that!

Debt settlement always carries the risk factor that your credit score will get hurt.

Not lying to you, but that’s really a serious issue. Debt settlement is definitely a good way to pay off debts, but it always comes with the side effect of lowering the credit score.

And, the truth is, there’s no such way you can save your credit, by doing settlement.

Credit score is a very tricky numeric value, that’s based on several conditions, formulae, and factors. And, the score is heavily dependent on how well you are performing with your debt payments.

Well, here’s the thing with debt settlement. You are paying an amount quite lower than the original amount you owe on the debt account. Which means, you are satisfying yourself but not the creditor!

Therefore, it’s pretty justified for the creditor to report the debt as settled, rather than listing it as ‘paid in full’.

This is where your score gets ruined.
An account, not paid off in full, is a red sign on your credit report and it looks really bad. It is, however, never revealed how a bad credit report results in a bad credit score, but isn’t it quite obvious?!?!

Therefore, we should be focused primarily on getting debt accounts rightfully recorded in credit reports, after you have done debt settlement.

Here’s how you should,

Settle debts without hurting credit score:

  • Be smart and make the first few approaches to the creditor on your own, and discuss these important things:

Tell the creditor, how badly you care about your debts! Say, that you really want to pay them off in full, but due to this family and social obligations (use teeth cracking words), you just can’t!

Tell with sheer emotion on your tongue that you want to settle your debts, as you really don’t wanna die being indebted! Tell the creditor that you won’t be able to rest in peace in your afterlife, if you don’t pay off your debts!

And, beg the man to make it work for you, or you will only have two choices left, embracing death, or filing bankruptcy and then embracing death!!

See, what the replies are….. If the horn-head agrees, then it’s now time to talk to him about your credit score. “If by any chance he can save it from crashing!!”
Listen to what he’s got to say and offer the proposal of offering some, under the table / in hand cash, to report the account as paid in full!

What if the creditor gets furious at your audacity, and says he can’t settle it??

Then, it’s time to,

  • Take help of a debt settlement company and discuss everything in the free counseling session you will receive from them:

When all your debt campaigns start to fail, the settlement companies are your saviors, I gotta tell you that!

They are experts in dealing settlement cases like nothing you can do on your own. So, after you contact a settlement company, they are going to first offer you a free counseling session.

If a settlement company is not providing you with any such counseling session, or charges a fee in your first approach, then you better not take help from that company.

In that session, they will discuss your debt problems in brief and hear anything important you need to say.
This is your time!
On top of getting your debts settled, you should ask them to take care of your credit score. Tell them that you want the debt account to be reported as ‘paid in full’ once settled.

There’s no reason for them to deny trying if they get a few Benjamins!!! But, see man.. Nothing will fall on your side, if you ain’t ready to spend a little!

Money talks, buddy, money talks! What do you think, the settlement company won’t offer the creditor a little cash to report the debt as ‘paid in full’? They definitely will, only that they won’t tell you.

But, it’s not our concern how they will deal with the creditors. Our job is to see whether or not you are getting a chance to save your credit or increase the credit score!

So, to be practical, these above two steps are the only way you can do a successful debt settlement and not hurt your score much.

Also, I am reminded of another thing.
Settlement companies usually ask you to halt your payments for a few months before they give the creditor a settlement offer. But, halting payments means your credit score will surely fall.

In such a case, you should talk to the advisor appointed by the company that you are concerned about your score and you don’t want to halt payments. See, if you can arrive at a fruitful solution.

Moreover, there’s absolutely no harm in checking out several settlement companies to get your desired services.

But, whatever it is, if you are doing a settlement, then you can expect to see your scores drop. A few points drop should not keep you worried.

And, once you get the debt settled, and it’s gone away for good, you can again focus on rebuilding your credit score, which won’t be that tough!

If however, you are caring too much about your credit score, then I believe settlement is not for you. It’s better you go for debt consolidation, and check out how consolidation can help you with debts, when you want to increase your credit score, altogether!


Will you get arrested for not paying the debt?

Well, many of us in the United States are unaware of the policies which can be used against the people when the debts are not paid on time. In a worse situation, you may be wonder can you go to jail for not paying a debt?

This will not only ruin your career but also stain your reputation. So,? Read this article to know the answers.

Here you will get the answers to your debt riddles and you must also be aware of the states where you can get arrested for not clearing the debts.

  • * Washington
  • * New Jersey
  • * Illinois
  • * Georgia
  • * Ohio
  • * Indiana
  • * Tennessee

So, now you may be wondering if the debt collector asserts the right to sue you. So, have a brief idea about what actions can be taken against the debt collector.

Can a debt collector sue you?

Yes, a debt collector can take legal action against you. If a creditor takes you to the court over an unpaid debt, you should make it a point to respond, either through an attorney or on your own, to the lawsuit.

Sometimes creditors will take this action to obtain a court judgement against the debtor to collect the unpaid amount. If the debtor doesn’t show up in the court, then the judge can issue an arrest warrant for failing to appear.

So, the debtor could be sent to the prison not for failing to pay the debt but for failing to follow the court order.

What is a Statute of Limitations on debt?

Yes, there is Statute of Limitations (SOL) period within which the creditors or debt collectors can file a lawsuit to recover. The SOL can differ state wise and debt wise with most falling between a 3-6 year range, while some may be as long as 10 years. The length is decided by the state and the type of debt.

According to the Consumer Financial Protection Bureau (CFPB), the number of years is determined by:

  • 1. State Laws
  • 2. The kind of debt you owe
  • 3. If the state law applicable is mentioned on your credit agreement

How can you avoid going to jail for not paying your debt?

So how can you make sure that you will never go to the wrong side of a jail cell door especially if you have debt?

  • a. Do not ignore debt collectors or warrants. Act strictly against it if possible.
  • b. Make sure you have gone through all the documents you get from bill collectors or the court.
  • c. If you get a summons and complaint, you are probably being sued. This means your presence is highly required in the court.
  • d. It is your duty to respond quickly and promptly to a summons, either denying or admitting to the debt.
  • e. Appear for all the court hearings.

So, avoid getting into any trouble by checking your debt amount and if you are being sued or given a court date, show up!

If you don’t, you may end up losing by default, and have a warrant against your name.

Can the Statute of Limitations on debt affect your credit score?

Yes, your credit score can be affected even if the SOL on a debt is no longer valid. Any debt you owe will appear on your credit report. If you can’t make payments, those debts can stay on your credit reports for as long as 7 years, impacting your credit score negatively. As a result, it can be quite taxing while obtaining a new credit card, home loan, or to take a car on lease, and if isn’t approved, then the interest rates could be high on your future loans.

What kinds of debts can get you arrested?

Yes, there are 2 types of debt for which the failure to pay could imprison a person.

  1. Failure to pay your taxes
  2. Failure to pay child support

If a person is unsuccessful in paying taxes, it can make him/her land in jail. The same thing implies for neglecting child support payments. Failing to do so can be considered contempt of court and can result in imprisonment for up to 6 months. There can also be fines for each violation in addition to the fees taken by attorneys and court costs.

Can you get arrested for unpaid student loans?

No, you won’t be going to jail or be arrested for not paying your student loans.

Failure to pay a student loan, credit card, or hospital bill is considered “civil debts” and you won’t be arrested for not paying your student loans or civil debts.

The department of education suggests several options for borrowers to get back on track with payment if you are lagging behind on paying your student loans.

Always remember that failure to repay student loans could also result in wage garnishment.

How can you escape from this mess?

You can escape being sued by an aggressive debt collector by considering the following:

Be skeptical: Get your facts checked, including whether or not the debt is yours and the amount is correct, by verifying the debt.

Stay on your toes: Do not feel burdened when dealing with debts. Don’t make hasty decisions. Take your time to find out the best way to handle a debt in collections. Don’t make hasty decisions.

Address your rights: Report harassing debt collectors to the Consumer Financial Protection Bureau.

I would like to mention that people who are in debt generally have this fear that they may be arrested for not paying their debts within the due time. Well, this is not entirely true. Debt collectors are known to warn debtors about going to jail if the debt is not met on time. Not only are these threats banal, but they also wrongdoing by the debt collector.

In fact, debt collectors assert the right to sue your debt collector for not paying the bills under the Federal rule and the potential state law depending on which state you reside in. To conclude, if you aren’t serious then you can go to jail for debt collections. So, take precautions to avoid that scenario.

how to do the best credit card balance transfer to avoid mistakes

How to do the best credit card balance transfer to avoid mistakes!

A balance transfer is no joke! It’s a very serious issue, and I firmly believe it needs proper precision to be successful at it.
There are things you need to pay attention to before doing a balance transfer, and to certain things after the transfer is done.
By now you must have already seen and came across many banks that offer balance transfer opportunities at very attractive terms and conditions. But that doesn’t mean they are welcoming you to do so!!
Remember, they are greeting you to do a balance transfer not only because you are in need of it, but also they see high profit if for once you start defaulting on payments after you have transferred your balance.

So, what is a balance transfer after all?

As per the words of finance, a balance transfer or debt transfer refers to handing over debts from one credit account to another.
However, here we will discuss credit card balance transfer, which is the most widely used debt transfer type among consumers and in the current financial market.
Suppose, you have a maxed out credit card. A maxed out credit card means its balance has crossed its credit limit, or is just about to cross.
Hence, you are pressurized to pay off this balance as soon as possible.
But, you see that no matter how many extra payments you make, until and unless you pay it off in full at one blow, your credit portfolio will remain hurt!
And, that’s exactly when a credit card balance transfer will come of great help. By opting for such an aggressive debt relief option, you can transfer your old card’s existing debt to a new card.
Hence, you search on the net for a balance transfer card, and see search results from every bank offering awesome balance transfer facilities!
Sounds lucky and probably seems like a gift from God right?!
Well, the situation is actually pretty complicated than it looks.
Obviously, you will be taking a very good step, as your old card’s balance gets wiped out with a single stroke.
Also, you are getting a good chance to escape paying high-interest amounts, as your new card is either coming with 0% APR (Annual Percentage Rate) intro period or a rate much lower than your previous card.
But where is the catch? Where is the big deal?

Why do the banks want you to do a balance transfer?

Well, they want you to do so because you start to owe them a good amount of money by doing a balance transfer.
If you have a credit card debt with bank X, then if you pay it off in the traditional way, then only bank X will get the money.
Now, once you transfer it to bank Y, then bank X gets paid, and so does bank Y! Therefore, in the middle of nowhere bank Y gets money from you, that was previously not included in the calculation!
Moreover, many banks charge a balance transfer fee. So, that’s an additional profit they are making.
This is very interesting I must say, how one debt can benefit multiple lenders at the same time, with you transferring the amount from one lender to another.
As an extra note, believe it or not, this is exactly the same way how debt collectors work!
They buy the debt from your original lender at a very low price, and collect from you the original amount (this amount can accrue interests), thereby making a huge profit!
The balance that we carry on our credit cards is pretty high and a big amount for us, but for the banks and the tall financial institutions, they seem like ants.
Not to harm the motivation to pay off debts, but these banks really love to play with our debt amounts.
They will just sit back, make a profit, and see you and me jumping around with our debts, doing a balance transfer, settlement, and what not.
That’s how it works. But, it doesn’t mean you should not execute your credit card balance transfer that you have planned for.
If they can take their share of profit, so can you.

Here’s how to do the best balance transfer to avoid mistakes and utilize the most of it:

a. Choose a balance transfer card that at least offers 6 months of 0% APR introductory period:

This should be your first preference if you plan to transfer your credit card debt.
There are quite a number of credit cards from reputed banks that are specially designed for balance transfer.
If you call your choice of banks and ask them to give you all the details about their available balance transfer credit card products and the specifications they carry, then you will not be dissapointed.
So, it’s your call, and therefore go for a card that offers a minimum of 6 months of 0%APR intro phase. Best, if you can grab those that carry 20 months or 1 and 1/2 years of 0% intro!
The more lengthy is this intro phase, more is the time you have to pay off your debts at no additional interest charges.

b. You may do multiple balance transfers, but make sure you are not holding onto your debt for too long:

I have already said earlier that the banks love to play with us. But, don’t you worry, as so can we play with them.
How, you might ask!
Well, suppose you transfer your old card debt to a new card that has a decent 0% APR time period. We can assume that to be 1 year, for instance.
If you can pay off your credit card debt within this time, then well and good. Else, after 10 or 11 months, you can again take out a new card from a different back and transfer the remaining debt to this card!
But, this can be a dangerous game, if your intentions are not to repay the debt. So, keep your head straight and only do multiple balance transfers, if you can’t pay off the debt at a single ‘go’, ethically!
If you do this for fun, then you will be caught in your own chains and your debt might start to accrue penalty fees, and other balance transfer fees, that many banks charge!

Don’t readily close your old card right after you transfer the balance:

This is a big mistake that many do!
Once they transfer their balance onto a new card, they straightaway close their previous card.
But why?!
Keeping the old card with a zero balance on it is actually very good for your credit portfolio, more so if the card has a pretty old history.
So, there’s absolutely no need in closing the cards if they charge no additional fees to keep them open.

Moreover, before I end, all I will say is, you have many balance transfer credit cards, to choose from, offered by many banks!
You have full freedom to choose the card that you find the best.
But make sure that your main motto always remains to pay off your debts.