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Credit cards are the worst kind of traps where getting in is easy but getting out is tough. The carrot given by credit card companies is the minimum payment you need to make and rolling over balance for next month. Next month, again you are required to pay around 2.5% as minimum payment and carry over your debt for the next month.
Whats the catch?
You might be thinking that these credit card companies are your well wishers since they are asking for just a fraction of your total spending? Do you know the rolling balance attracts a very high interest rate? The interest is as much as 2%. Annually, it works out to be 24%, which is insane by any calculation. Moreover, the mounting debt by rolling over your monthly payments will become a lifelong pain. Surprisingly, its not the case with a couple of individuals, but thousands of Americans are badly affected by it.
Whats the way out?
Credit Card debt refinance is a ready solution for this financial problem. By this we consolidate credit card debt. If we simply put it, it is nothing but transfer of balance from old and expensive credit cards to a new or existing low cost card. As the competition is heating up in the credit card market, the opportunity for Credit Card debt refinance has risen dramatically. We can always go for 0% credit cards. However, to acquire it, you need to have a good credit score. Otherwise, there are several other credit cards readily available, which have a low interest and free services. Therefore, refinance credit card debt looks a logical alternative than paying off high costs on existing credit cards.
While going for credit card debt refinance, you should be aware that, balance transfer from one card to another is also not free always. Some credit card companies charge between 10% – 12% for this facility. However, it still makes sense to go for it if currently you are paying 20% or 25% as interest & penalties on your current credit cards. Therefore, a deep analysis on the alternatives will save you a stack of money.
To sum up, the wiser way is to consolidate credit card debt and give expensive credit card companies a run for their money.