Balance Transfer: Righting the Wrongs

A balance transfer involves moving cash from one bank card to another of a different financial institution. During the process, a fee is charged by the lender, and the cost usually is a percentage of the total amount transferred. Based on research, a balance transfer is an essential technique if you need to pay high-interest credit card debt. Furthermore, most balance transfer cards charge zero interest for 12 to 21 months.

According to financial experts, balance transfers on credit cards are given to clients with good or excellent scores. This means that for your request to be approved, you need to have a FICO score of 670 or above. People with a FICO score of above 740 are guaranteed to get theirs approved.

If Yours is rejected, here are the steps to help you pay down the debt:

Stop Using the Credit Card

When planning how to pay off your obligation, the best thing to do is to stop using the card to avoid accumulating. Experts cite that despite how much you pay each month to minimize your balance, using the credit card for purchases makes it more difficult to clear the debt.

Develop a plan to pay the debt and adhere to using a debit card or cash when making purchases or paying bills.

Focus on Improving Your Credit Score

To get your balance transfer approved next time, you need to improve your reputation. Paying off your balance is the best strategy for improving your credit score. When you pay off your debt, you lower your credit utilization, a factor that contributes about 30 percent of your FICO score.

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Other things you can do to improve your reputation include paying all your balances early and keeping old credit accounts open to increase the length of your payment history.

Minimize Your Spending

Cutting down your daily, monthly, and yearly expenditures can also help you pay down the bill quickly. Spend less on entertainment, clothing, and other things that may destroy your budget. The extra cash acquired can be spent on debt payoff, which makes your life easier.

However, if you are not sure what spending to cut, check out your last bank statement and card bills. Identify which items consume a considerable chunk of your earnings, then try minimizing their usage or removing them from your budget.

Consider A Debt Consolidation Loan

Personal debt consolidation loans come with competitive interest rates and can be quite tricky to get approval for.Nonetheless, if you happen to secure one, it can help you to pay off your debt by making fixed monthly payments within a specific period.

When diving into debt consolidation loans, watch out origination fees and other hidden charges. Consider a loan with an interest rate that is lower than your credit card. The interest rate should also be fixed within the time you are supposed to pay off the debt.