Are Credit Card Transfers as Good as Debt Consolidation?

Aside from student loans and medical bills, the most common reason for seeking a consolidated Debt Solutions loan is credit card debt. With a few swipes of the card, the balances can really start to pile up. And with even one late payment, those interest rates can skyrocket to more than 5 times the original APR.

According to federal statistics, about 4% of the U.S. population has $10,000 or more in personal credit card debt. That's a lot of money to owe for the average person, and even moreso when you consider that ridiculous interest rates that many people are paying on that - some as high as 29%.

But a lot of people with decent credit make the mistake of thinking they can consolidate their credit cards to one credit card with a low interest rate and come out ahead, just as if they'd gotten a consolidation loan. We can understand why people would want it to be true. Credit card companies make transfers very tempting and easy as writing a balance transfer "check."

But you might not think we're being objective. After all, we are in the consolidation loan business. Fair enough. So, if you think you can go it alone with the help of credit card companies that would be more than happy to charge you 29% interest on your balance should you miss their deadlines by even 24 hours, here are three very important things to consider:

• They may charge balance transfer fees Many credit card companies do offer surprisingly low interest rates on balance transfers in hopes of luring people to jump ship from one card company to another. They send out pre-printed - and pre-approved - balance transfer checks that make transferring balances as easy as paying the bill. These checks are easy, so easy that many miss the fine print before it's too late: Yes, we'd be happy to transfer those balances to our card, but at the same rate as a cash advance. And once it's done, it's done. And those higher cash advance rates can really start to compound the numbers very quickly.
• Be careful of introductory periods Consolidation loans offer lower interest rates than credit cards, so we know that this is a strong inducement. But something you'll never see with a Debt Solutions consolidation loan is an increase in the APR if you make a payment late. Not so with many, many introductory rates on balance transfers that can start off as low as 0% interest for six months! And most also have a clause which allows them to up those rates as soon as you slip up and make a payment a day or so late. Boom! Your 0% percent interest rate has suddenly become 23% interest - on a now much larger balance! We will never do that to you because your interest rate on a consolidation loan is locked in for 30 years. But even if you do follow their offer to the letter, reading all the mouse print at the bottom of the reverse side of their screaming deal, guess what? It's only for a short time. Only rarely do they extend beyond 12 months. That's not that long, really, before you will find yourself needing another balance transfer offer. Why bother with that hassle when you can take advantage of an almost permanent solution to the problem with a Debt Solutions consolidation loan?
• Are there strings attached to the transfer? Some low-interest credit cards don't even allow you to transfer balances. Or they carry surcharges or special fees for balance transfers. And as already noted, many treat a balance transfer like a cash advance, and charge the same ridiculously high rates of interest.

Fix the Problem with a Fixed Rate

You'd have to be as good with keeping track of due dates and the dates the introductory rates end as a professional plate spinner in the circus to make credit card balance transfers work for you. And even if you are that adept, it can only last so long thanks to the way the credit card companies rig the system. Without a doubt anyone who is in the business of loaning money does it to make a profit. But some credit card company execs have actually gone on record as saying that the credit card system is legalized slavery. Did you catch that? It's not bad enough that they do it, they feel you are so gullible or stuck that they can brazenly say it publicly! Like financial vultures waiting for you to fail, they are are positioned to take full advantage of the mere fact that you are not a robot or a personal computer. You will make a mistake. You will slip up. And they will make sure that your next statement is calculating interest at an exorbitant rate.

So, are credit card transfers as good a solution as loans to consolidate debt? N-O.

Don't try to play the credit card company's game. Take steps to put a permanent solution in play instead. Let Debt Solutions consolidation loans give you the breathing room you need, at a lower interest rate today. You'll be glad you did.