Although the holidays are over, and the decorations are stored away for another year, the ensuing holiday debt can often be difficult to manage. For example, the buy now, pay later (BNPL) financing option was popular during the holidays, as almost 40% of Americans used this type of financing for holiday gifts. According to a survey by Lending Tree, more Americans borrowed during this past holiday season as compared to 2020. The survey found 36% of Americans took on an average of $1,249 in debt, with 62% using credit cards and 23% a personal loan. The majority of those surveyed indicated they would not be able to pay their accumulated debt off within 30 days.

If you find yourself faced with holiday debt, and the question of how to pay it off, balance transfer cards could be an attractive option.

Balance Transfer Cards

You have probably seen the ads or may have received the offer for balance transfer cards. Credit card companies, looking to grow their customer base, are promoting their low or zero interest balance transfer cards. These cards offer the ability to transfer an existing credit card balance onto a new credit card, with often no interest, for varying periods of time, typically six to 18 months.

Are these card offers a good idea? They might be a good option if used wisely, as they can buy you some time to pay off your debt and save you the interest charges on your existing credit card balances. However, before moving forward you will want to read the terms and conditions carefully to understand the interest rate, late payment charges, and balance transfer fees, which can range from 3 to 5 percent, or a minimum dollar amount. You will also want to be aware of the consequences of not paying your balances off on time. Some cards can charge an accumulation of all the interest if not paid in full. Be sure to call and ask the credit card company, or bank issuing the card, for clarification on any of the terms that may not be clear.

You will also want to have a sound budget in place to ensure you are in a position to pay off your entire balance on time. A mistake often made is to view balance transfer cards as a no interest loan and open additional cards to transfer other balances over to. This can lead to spiraling debt and could damage your credit. Every time you open a credit account, it can impact your credit score, and if you do it too often, it can damage your credit and you could end up paying higher interest rates on future loans.

Debt can become a problem and feel overwhelming. If you find yourself needing help with credit card debt, or other types of unsecured debt, such as payday and installment loans, medical and phone bills, you can contact Progressive Debt Relief for a free consultation by calling 877.590.1847 or by submitting our contact form.

*Progressive Debt Relief does not provide legal, financial or tax advice and the above should not be construed as such.