Credit card debt can quickly get out of hand. High interest rates cause your balance to grow while paying fees across multiple banks adds unnecessary financial strain. The good news is that consolidating your credit card debt can save you time and money.
What does it mean to consolidate your credit card debt?
Consolidating debt means rolling all your debt into one account with one monthly payment.
Essentially, you would use one credit card to pay off all your other credit cards and then close those accounts. Then, you focus on getting that singular remaining credit card debt paid off.
It’s also known as a balance transfer and the credit card you use to consolidate the payments is sometimes called a balance transfer card.
How a balance transfer can save you money:
Consider this example from this Forbes article about credit card debt in the US:
The average U.S. household with debt carries $15,762 in credit card debt. The average interest rate is 13.70%, which means American families could pay more than $2,000 of interest over the next year if they make only the minimum payment.
Where that credit card debt is scattered across various credit cards, each with their own annual fees, then you’re paying additional fees on top of that interest.
If that credit card debt is consolidated onto one credit card with a lower interest rate, you’ll reduce the total amount of money required to pay back the debt over time.
This means you can pay off your credit card debt faster.
Balance transfers may reduce late fees and penalties
After you consolidate your debts, you only have one monthly payment so you’re less likely to forget to pay it on time. This means you’re less likely to be hit with penalties for late payment, so you’ll save even more money.
How to consolidate your credit card debt
You can consolidate your credit card debt in four easy steps:
1. Note down all your current credit card debt and what the interest rate is on each of them
2. Find a credit card provider with a lower interest rate
3. Use that credit card to pay off your existing balances so that only one credit card debt remains
4. Pay off that credit card over time.
Bear in mind that paying more than the monthly minimum will save you money in the long run.
Factors to consider before transferring your balance
Consolidating debt isn’t a strategy that will work for everyone so there are a few things you should consider before you do, namely:
Can you pay off the debt before any promotional interest period ends?
If not, you should consider whether you’ll be able to manage the payments and interest after the promotional period ends.
Why you got into debt in the first place
Poor money management and poor spending habits don’t go away overnight. You should speak with a professional to get your spending habits under control and pave the way for a brighter financial future.
Consolidate your credit card debt with Osoyoos Credit Union
Osoyoos Credit Union’s credit card partner, Collabria, is offering an introductory special 5.9% annual interest rate on balance transfers to any Collabria* credit card. By taking advantage of this special rate, you’ll get to:
- Consolidate your balances and pay only one interest rate on balances
- Save on annual fees from multiple cards
- Enjoy this 5.9% balance transfer rate on as many balance transfers as your credit card limit allows for the next six months from the date of transfer
This offer is available until July 31, 2020.
Remember: you should read all the terms and conditions to determine whether this offer is right for you.
If you’re not sure about whether consolidating your debt is the right move for you or your business, get in touch with one of OCU’s professional financial advisors for assistance.
Together we’re better.