Have you incurred holiday debt due to your passionate love affair with plastics and shopping? Did you fail to suppress your urge for buying holiday gifts with credit cards? Well, if you need to fix your financial position heading into the New Year you can use balance transfer credit cards to do so.

Dude, you’re not alone. A recent survey conducted by Magnify Money revealed that Americans racked up an average $1054 holiday debt during the festive season. Here’s an effective way for paying off holiday debt.

How to Use Balance Transfer Credit Cards for Paying Off Holiday Debt

Fun, games, and parties are over. Now that holidays are behind us, we have to think about the ways to get out of holiday debt.

Fortunately, you can easily knock off credit card debt without paying high interest with balance transfer credit cards.

Let me tell you how.

How to use balance transfer cards for paying off holiday debt

Balance transfer credit cards help you knock off debt quickly by rolling your existing balance to a new credit card with low or 0% APR.

I love balance transfer credit cards because they offer 0% APR from 9 to 21 months. There is no need to pay any interest and every cent of my payment goes toward the outstanding balance.

This means if I pay $200, it will go toward the balance. There is a great scope for saving money.

Here are a few ways to get out of holiday debt with balance transfer credit cards.

1. Look for the best balance transfer credit card:

Check out the various balance transfer credit cards offered by Discover, Chase, Bank of America, Mastercard, etc. Look at the offers and compare them with your specific debt payoff goal.

Suppose there are 2 balance transfer credit card offers.

• Credit card A – There is 0% teaser rate for 12 months. There is no balance transfer fee.
• Credit card B – There is 0% introductory APR for 15 months on purchases. There is a balance transfer fee.

Which offer is more appealing to you? Can you pay off the entire balance in 12 months? If yes, then credit card A is the best option for you.

You’ll have access to best balance transfer options when your credit score is good. Don’t worry if you have a poor credit score. Use these tips to raise your credit score by 200 points.

There are options even for you. You just need to do a little research. Read reviews of balance transfer credit cards from various personal finance blogs and good financial websites.

2. Calculate how much you have to pay for the fee

Be prepared to pay a fee between 0% and 5% of the total amount transferred. If you have a good debt amount and balance transfer cuts down the current interest that applies to the balance for many months, then it makes sense to pay the fee.

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3. Pay off debt before the promotional period is over

It’s time for calculations. Figure out how much you have to pay every month for clearing your holiday debt before the introductory period ends.

Your goal is to clear the balance before the teaser rate ends. If you can’t pay off the entire balance, then you can be in a big trouble. You could end up paying a higher interest rate and the balance transfer fee.

Balance transfer credit cards – Are they good for your credit score?

There can be a small short-term dip in your credit score if you apply for multiple balance transfer cards due to new inquiries on your report. It may seem that you’re desperate to get a credit card.

However, when you get a balance transfer credit card, your available credit pool increases. This helps to improve your credit-utilization ratio and increase your score eventually.

The ideal credit utilization ratio is zero or close to zero. If you owe $200 and you have $2000 in available credit, your utilization ratio is 10%, which is excellent.

Balance transfer credit cards can hurt your credit score if you don’t pay on time. Moreover, when you fail to pay on time, it may cause the 0% offer to end instantly.

The credit card company can revert the interest rate back to the go-to rate. Your credit card APR may increase from 0% to 18% instantly. Use these best credit cards to churn for travel hacking.

Conclusion to Knock Off Holiday Debt 

Try to avoid using low-interest balance transfer credit cards for making new purchases. Your primary goal is to get rid of debt quickly.

So don’t create more debt. If you need auto financing, here are a few tips to prepare for financing a used car.

Have you used balance transfer credit cards to improve your financial position? Comment below.

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