Credit Card Balance Transfers as a Debt Management Option

If we are to believe what we read, here in the UK, and possibly other countries as well, we are sitting on a “debt time bomb”, made up of credit card and other unsecured accounts.

The fact is we as consumers have changed how we make purchases over the years, and buying online has become a huge industry; which means we use credit and debit cards as our computers and mobile phones and tablets, have no way to put cash in them to pay for these purchases.

We are moving towards a “cashless society” and cash is being used less and less. In fact credit and debit card usage overtook cash mid 2018.

Which feeds into the whole debt time bomb, as we are using our credit cards more and more, and unless we are paying off those balances each month, which we are not, we are finding our selves more and more in debt.

So for some, as their credit card balances rise, they are looking for ways to get out of debt, to pay off their credit cards.

One option is balance transfers.

Can I Really Save Money and Get Out of Debt By Transferring Credit Card Balances?

Yes, you can, and we will explain how.

Some credit cards carry a very high rate of interest on the account, 20%, 25% or even as high as 30%.

This means if you carry a balance on your credit card each month you can be paying quite a bit in interest; money that could be going to paying down the principal balance.

The obvious choice if you have and use credit cards is to not carry a balance on the account. Pay the amount charged in full at the end of the month or payment cycle. However, not all of us can do this. So we carry a balance on our credit card(s).

Which means if we pay just the minimum payment each month, or even if we pay more than the minimum, but not the full balance, we are paying interest. Again, money that could be used to pay the account off in full.

However, if your credit card has a 25% interest rate, and you find another credit card with a lower interest rate, 18% or perhaps even lower, and some credit car companies were offering 0% rates for a short period of time, and you transfer the balance, you could save money.

I say/write could save money, as we will see you still need to pay the balance off before the introductory rate expires, or pay more than the minimum monthly payment.

Finding a credit card with a zero 0% interest rate is getting harder and harder, but there are some cards out there with low rates. One thing to also keep in mind is there can be fees associated with transferring balances.

If a card carries a 2% transfer balance fee and you have a balance of £2,000, this can cost you £40 just to transfer the balance. You need to keep this in mind to see if the transfer is worth it.

In most instances, if the interest rate is substantially lower, it is worth the fee.

The next step after you transfer the credit card balance is to pay off the account while you are under a low or zero interest rate period.

It does you no good to transfer a balance on a credit card, only to continue to pay the monthly minimum payment.

If you have a low or zero percent rate, more of your payment is going to pay down the balance, and less to the interest charged.

You also need to stop using the credit card. Using/charging on a credit card while trying to pay it off is like trying to hit a moving target; it is more difficult.

So to recap:

* Stop using a credit card if you are trying to pay the balance off.

* Pay more than the minimum monthly payment.

* Transfer the balance on the account to a lower interest rate.

Sounds easy, and it is, but finding the elusive White Whale of low interest rates or zero interest rates is now becoming more and more difficult.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.