Get More From Your Credit Cards This Holiday

If you haven't started thinking about the holidays yet, they're right around the corner! That means it's time to start making plans and strategizing ways to save money. A rewards credit card is an excellent tool for spending, getting benefits, and boosting your budget during the holidays.

To discuss tips for getting get more from your credit cards, I interviewed Kristy Olinger, a Credit Card Product Manager at Citizens. She's spent decades working in the credit card industry and knows a lot about consumer behavior, often-overlooked card benefits, and ways to use cards safely. She also co-hosts her own podcast, The Opposite of Small Talk

8 Ways to Make the Holidays Less Expensive and More Memorable

Kristy and I had a great conversation about how to kick off the holiday season with wise shopping strategies and what to do if you regularly end up with a debt hangover in January. Here are a few of the topics we cover on this Money Girl podcast interview:

  • Holiday planning tips that help you stay out of debt.
  • How to use credit card rewards to stretch your holiday budget further.
  • What is an extended card warranty and when to use it.
  • The importance of reviewing your cards' benefit guides.
  • Why it's critical to use a credit card instead of a debit card online.
  • How using a card in a digital wallet gives you more cyber protection.
  • Which credit card is best for different types of purchases.
  • When to use a balance transfer credit card to manage debt.

Listen to the interview using the embedded audio player or on Apple PodcastsSoundCloudStitcher, and Spotify.

What questions do you have about using credit cards wisely, paying off debt, or building excellent credit? Leave a voicemail for Laura by calling 302-364-0308. Follow her on Instagram and sign up for her weekly newsletter at


Discover it Cash Back vs. Discover it Student Cash Back: Which is best for you?

If you’re a student shopping for your first credit card, or a parent comparing cards on your kids’ behalf, you may be wondering whether to apply for a card that’s designed specifically for college students, or if you should stick with a more general credit card.

The answer depends, in part, on what kind of student card you’re considering, how old a student is and what limits you want to set. Discover, for example, offers a student cash back card, the Discover it® Student Cash Back card, that’s not too different from Discover’s flagship cash back card. However, its terms are more restrictive, and it includes a slightly higher APR and less generous introductory APR.

The Discover it® Cash Back card, in contrast, offers a bigger credit limit than you’ll get on the student version and a more generous promotion, including a 0% intro APR for 14 months on purchases and balance transfers (then a variable APR of 11.99% to 22.99%). But it doesn’t have as many safeguards as the Discover it Student card, so students could potentially get into bigger trouble with it. Young adults new to credit are also unlikely to qualify for the Discover it Cash Back card. Discover doesn’t allow co-signers, so a student would need to have a significant credit history and income to qualify.

Discover it Cash Back vs. Discover it Student Cash Back

Card Discover it Cash Back
Discover it® Cash Back

Discover it® Student Cash Back
Rewards rate
  • Enroll every quarter to earn 5% cash back in rotating categories (up to $1,500 per quarter)
  • 1% cash back on other purchases
  • Enroll every quarter to earn 5% cash back in rotating categories (up to $1,500 per quarter)
  • 1% cash back on other purchases
Sign-up bonus Matches your cash back at the end of the first year

Matches your cash back at the end of the first year

Annual fee $0 $0
Estimated rewards value in first year ($1,325 monthly spend) $442 $398

Introductory APR

Again, the Discover it Cash Back has a 0% intro APR for 14 months on new purchases and balance transfers, though there is a 3% balance transfer fee (and future balance transfer fees can go up to 5%). The Discover it Student also has a 0% intro APR, but only for six months on new purchases, then the regular variable APR will rise to 12.99% to 21.99%.

For parents who fear their child will spend a lot with the freedom of plastic, forget payment deadlines and carry debt, the longer intro APR on the Discover it Cash Back makes more sense. However, the shorter intro APR and higher regular APR on the Discover it Student card are also strong deterrents to students who’ve never had a credit card before and may end up training them to have better payment habits.

If the thought of your student amassing a huge debt without your knowledge terrifies you, you could always apply for the Discover it Cash Back card yourself and add your kid as an authorized user. Discover doesn’t allow co-signers, but it does allow authorized users. As an authorized user, even if account holder bears the responsibility for payment, you could build credit history and increase your credit score. It also gives kids an opportunity to earn a significant amount of cash, without the risk of owning their own card.

Annual fee

Good news: Both the Discover it Cash Back and the Discover it Student Cash Back have no annual fee, which is good for students considering education these days is getting more and more expensive. For either card, you’ll earn a solid amount of cash back without paying anything for the card itself.

Other perks

Discover it Cash Back

Discover it Student Cash Back

  • Choose your credit card color or design
  • Free FICO credit score
  • No late fee on cardholders’ first payment
  • No foreign transaction fee
  • Free Social Security alerts
  • Free Experian credit monitoring
  • Ability to freeze account in seconds
  • Choose your credit card color or design
  • Free FICO credit score
  • No late fee on cardholders’ first payment
  • No foreign transaction fee
  • Free Social Security alerts
  • Free Experian credit monitoring
  • Ability to freeze account in seconds

Both cards have other benefits that suit students incredibly well including viewing your FICO credit score for free on the Discover account, no late fee on your first late payment and no foreign transaction fee, in case you decide to spontaneously visit your friend studying abroad. If you lose the card or it gets stolen (anything can happen at school), you can easily freeze it until you have time to report the loss and request a new card.

Discover it Student Cash Back: Best for undergrads and credit newbies

If you’re still in college and under 21, then you won’t qualify for either card unless you can prove you earn an independent income. The Credit CARD Act of 2009 requires underage cardholders to show they have enough income coming in to afford their own card, or they need to get a co-signer to help out. Since Discover doesn’t allow co-signers, and if you’re determined to be the cardholder (versus an authorized user), you’ll have to look elsewhere if you’re underage and don’t have a part-time job.

Nevertheless, the Discover it Student Cash Back is one of the strongest student credit cards out there. The 0% intro APR for six months, simple rewards structure, late payment fee waiver and no annual fee are all features designed for students who are new to credit. The credit limit on the Discover it Student is also likely to be fairly low, preventing students from significantly overcharging.

Discover it Cash Back: Best for grad students or people who live off campus

In contrast, the Discover it Cash Back suits grad students or upperclassmen who live off campus – people who earn more and spend more. The card awards larger credit limits, but you must have a good or excellent credit score and, therefore, some credit history, to be approved. Unlike the Discover it Student card, this is a card you can use regularly for everyday purchases, considering the Discover quarterly bonus categories calendar. The categories include gas stations, grocery stores and Target, which students who live on campus are unlikely to charge.

The gas and grocery categories perfectly suit those who commute to school or eat at home every day, rather than those with a campus meal plan.

Bottom line

For most young students, the Discover it Student card is a clear winner. Students without any credit history are not only more likely to qualify for it, but the card’s strong limits also make it more difficult for them to rack up a lot of debt.

The Discover it card, by contrast, is more difficult to get and riskier. However, it’s also more flexible and potentially more lucrative since it gives cardholders more room to charge new purchases, earning greater rewards. Older students and those who live off campus may also get more out of the Discover it card since it offers bonus cash back on purchases they’re more likely to make, such as gas and groceries.


Credello Review – Take Control Of Your Financial Situation

This Credello review is in partnership with Credello.

Are you looking to finally take control of your finances? With the Credello money tool, you can get personal guidance that will help you to make better money decisions all from your phone.Credello Review

Credello is a tool that helps you to make easy financial decisions so that you can borrow, save, and invest through personalized recommendations that they give you.

The solutions that they give you fall in the below categories:

  • Debt – Credello will show you how to pay off your debt faster, which may include showing you debt consolidation options.
  • Personal loans – Credello will show you the lowest interest rates on personal loans customized to you, and how you can apply.
  • Credit cards – Credello will show you which credit cards are best for you and your financial situation. The Credello tool will also show you how to improve your credit score.
  • Home equity loans – Credello will teach you about home equity loans and HELOCs.

As you can see, there are many different areas in which Credello can help you out.

If you have debt and are looking to repay it faster, then this may be an option for you to look into as they have several different helpful tools to try out.

Related content: 4 Things About Debt You’re Confused About but Too Embarrassed to Ask

Here is my Credello review.


What is Credello? 

Credello is a personal finance platform that helps consumers like you and me make the best decisions for themselves. Credello gives personalized advice and tips in order to do this.

Some of the great things about Credello include:

  • They help consumers compare products that meet their needs without you having to share personal information. I know that sharing personal information in order to see recommendations can be extremely annoying. Thankfully, Credello does not require that!
  • They are not biased. They don’t show products that only make them money, instead, they show solutions that are available to you whether or not it makes them money.
  • Credello makes product choices easier for you. You don’t have to do additional research if you don’t want to. Instead, Credello makes it as easy as possible.

This money tool is easy to use, and the questions are simple to answer. If you have debt, Credello may be a great place to start to learn more about how to become debt free.


How does Credello work?

Here’s how Credello works:

  1. First, you will answer some questions that are easy and basic so that Credello can learn more about you and your financial situation.
  2. After that, you will then share your money goals with Credello so that they can make personalized recommendations.
  3. Next, Credello will show you different solutions, talk about how they compare, and list out how well they match what you need.
  4. Lastly, Credello allows you to prioritize the different options that you have so that you can choose the best option for you.

It’s very easy!


What does the Credello debt payoff calculator show?

Do you have debt? Do you want to pay it off quickly?

I enjoy playing around with different financial calculators, and this is one I would have enjoyed back when I had debt.

This debt payoff calculator is easy to use and it will show you how long it’ll take you to pay off your debt at your current rate as well as the amount of interest you will pay, how changing the monthly amount you pay will impact your debt payoff plan, and more.

To use this calculator, you simply just:

  1. Type in your debt information, such as how you owe, your interest rate, and your monthly payment amount.
  2. Next, you will be shown different ways to pay off your debt quickly, such as with the snowball and avalanche methods, and how this will impact your debt payoff progress.
  3. The tool will then show you how extra payments may help you become debt free faster.
  4. The calculator will then estimate your debt free date and calculate the amount of money you can save in interest.

You can see a screenshot example below.

You can check out their debt payoff calculator here.


How does Credello’s debt consolidation recommendation tool work?

If you have multiple loans, then you may want to look into a debt consolidation loan.

This is a loan that is used to pay off multiple loans, and then combined into one monthly payment.

There is usually a lower interest rate, which can help you save money and possibly pay off debt faster. Another positive is that a debt consolidation loan may help you to simplify your finances, as you will only have one loan left, instead of having multiple.

Debt consolidation loans aren’t for everyone, though. You will want to be sure that you understand whether there are any fees, such as origination or balance transfer fees, annual fees, and so on. Plus, you’ll want to make sure that you can make all of your payments.

Consolidating your debt may be for you if you have a good credit score (so that you can get a low interest rate), you want to simplify your debt into one monthly loan, and you want a fixed monthly payment with a clear end date.

Credello has a money tool that will allow you to compare different debt consolidation options that may be available to you.

This money tool gives you unbiased recommendations which also includes personalized matching – so that you know what may be the best option for you.

Plus, you don’t have to share personal information or connect to any accounts to see Credello’s recommendations.

Here’s how it works:

  1. You simply answer easy questions about the debt that you have and your financial health.
  2. Then, you’ll tell Credello why and how you want to consolidate your debt. This helps them give you personal recommendations because they will know your financial goals in life.
  3. Next, you’ll receive a list of debt consolidation recommendations that you can compare side-by-side.

You can see how it easily works in the image below.

Credello debt consolidation review

Please click here to check out Credello’s debt consolidation tool.


Is Credello safe? Is Credello legitimate?

Yes, Credello is safe.

They ask basic questions to give you personalized results, and I did not come across any questions that were too personal as I was reviewing Credello.

This is something that I like about Credello, as too many money tools these days ask you for your social security number right away, or for you to connect your accounts. Credello simply gives you recommendations so that you can learn about your different options.


How much is Credello?

Credello is free to use for all. The company gets paid by some of their lender partners when a Credello user signs up for a loan with them.


My Credello review.

If you are looking to improve your financial situation and pay off your debt, then Credello is an option to look into.

Their personalized advice is easy to get, and there are no intrusive questions that they ask. There are no real big hurdles to see their recommendations either, which I liked because it made the whole process very quick.

You can get started with Credello by clicking here.

Do you have any questions you’d like me to cover in this Credello review? 

The post Credello Review – Take Control Of Your Financial Situation appeared first on Making Sense Of Cents.


How to Get Debt Consolidation Loans When You Have Bad Credit

Debt consolidation is one of the most effective ways to effectively manage debt. It can greatly improve your debt-to-income ratio and help you get back on your feet. You will have more money in your pocket and less debt to worry about, and while your options are a little more limited if you have bad credit, you can still get a consolidation loan.

In this guide, we’ll look at the ways that a debt consolidation loan will impact your credit score, while also showing you the best ways to consolidate credit card payments and find a credit card consolidation plan that suits your needs.

What is a Debt Consolidation Loan and How Does it Work?

A debt consolidation loan can help you to manage credit card debt and other unsecured debts by consolidating them into one, manageable monthly payment. You get a large loan and use this to clear all your current debts, swapping several high-interest debts for one low-interest loan.

You’ll consolidate multiple payments into a single monthly payment, and, in most cases, this will be much less than what you’re paying right now.

The problem is, creditors aren’t in the business of helping you during your time of need. They’re there to make money, and in exchange for your reduced monthly payment, you’ll get a loan that extends your debt by several years. So, while you may pay a few hundred dollars less per month, you could pay several thousand dollars more over the lifetime of the loan.

Why Consider Debt Consolidation for Bad Credit?

You can use a debt consolidation loan to consolidate credit card debt, clear your obligations, reduce the risk of penalties and fees, and ultimately improve your credit score. What’s more, you may still be accepted for a debt consolidation loan even if you have a poor credit score and a credit report with several derogatory marks.

It’s an option that was tailormade for borrowers with lots of unsecured debt, and it stands to reason that anyone with a lot of debt will have a reduced credit score. Of course, it still helps if you have a high credit score as that will increase your chances of getting a low-interest debt consolidation loan, but even with bad credit, you can get a loan that will reduce your monthly payment.

How Does Debt Consolidation Affect Your Credit Score?

A debt consolidation loan can impact your credit score in a number of ways, all of which will depend on what option you choose:

  • A balance transfer can reduce your score temporarily due to the maxed-out credit card and a new account.
  • If you use a consolidation loan to clear credit card balances, you will diversify your credit report, which can benefit up to 10% of your credit score.
  • If you continue to use your credit cards after clearing them, your credit utilization will drop, and your credit score will suffer.
  • A new consolidation loan account will reduce your credit score because it’s a new account and because the average age of your accounts has decreased.
  • Debt management will reduce your credit utilization score by requiring you to cancel credit cards. This accounts for 30% of your total credit score. 

The good news is that all of these are minor, and the short-term reductions should offset in the long-term. After all, you’re clearing multiple debts, and that can only be a good thing. 

A debt consolidation loan will not impact your score in the same way as debt settlement or bankruptcy.

Alternatives to a Debt Consolidation Loan 

A debt consolidation loan isn’t your only option for escaping debt. There are numerous options for bad credit and good credit, all of which work in a similar way to a debt consolidation loan.

These may be preferable to working with a consolidation loan company, especially if you have a lot of unpaid credit card balances or you’re suffering from financial hardship.

How Does a Debt Management Program Work?

Debt management is provided by credit unions and credit counseling agencies and offered to individuals suffering financial hardship and struggling to repay their debts. A debt management plan typically lasts three to five years and works with unsecured debt only, which includes medical debt, private student loans, and credit cards, but not mortgages or car loans.

A debt management plan ties you to a credit counseling agency, which acts as the middleman between you and your creditors. The agency will help to find a monthly payment you can afford and then negotiate with your creditors. You make your monthly payment through the debt management program and they distribute this to your creditors.

Debt management specialists are experts in negotiation and know how to get creditors to bend to their ways. They understand that lenders just want their money and are keen to avoid defaults and collections, so they remind them that failing to negotiate may increase the risk of such outcomes.

Debt management programs are not free. You will be charged a small up-front fee in addition to a monthly fee. However, the amount of time and money they save you is often worth the small charge.

The only real downsides to a debt management plan is that you’ll be required to cancel most of your credit cards, which will impact your credit score, and if you miss a single payment then creditors will revert to previous terms and your progression will be lost.

A Balance Transfer

You don’t need a debt consolidation loan to consolidate your debt. You can also use something known as a balance transfer credit card. 

A balance transfer allows you to consolidate credit card debt onto a single card. These cards offer you 0% interest for up to 18 months and allow you to transfer multiple credit card balances.

As an example, let’s assume that you have the following credit card balances:

  • Card 1 = $5,000
  • Card 2 = $2,000
  • Card 3 = $3,000
  • Card 4 = $5,000

That gives you a total credit card balance of $15,000. If we assume an APR of 20% and a minimum payment of $500, you will repay over $20,000 in 42 months, with close to $6,000 covering interest alone.

If you use a balance transfer credit card, you will be charged an initial balance transfer rate of between 3% and 5%, after which you will not be required to pay any interest for up to 18 months. Continue making those same monthly payments, and you’ll repay $9,000 before that introductory period ends, which means your debt will be reduced to just $6,000 and can be cleared in 14 months with less than $800 in total interest.

This is a fantastic option if you have a strong credit score, otherwise, you may struggle to find a credit limit high enough to cover your debts. However, it’s worth noting that:

  • Your credit score may take an initial hit due to the new account and maxed-out credit card.
  • The interest rate may be higher, so it’s important to clear as much of the balance as you can before the introductory period ends.
  • You may be charged high penalty fees for late payments.
  • You can’t move credit card debt from cards owned by the same provider.

What About Debt Settlement?

Debt settlement works in a similar way to debt management, in that other companies work on your behalf to negotiate with your creditors. However, this is pretty much where the similarities end.

A debt settlement specialist will request several things from you:

  • You pay a fee (charged upon settlement).
  • You move money to a secure third-party account.
  • You stop meeting your monthly payments.

They ask you to stop making payments for two reasons. Firstly, it will ensure you have more money to move to the third-party account, which is what they use to negotiate with creditors. They will offer those creditors a lump sum payment in exchange for discharging the debt, potentially saving as much as 90%, on top of which they will charge their fee. 

Secondly, the more payments you miss, the more unlikely it is that your account will be settled in full, at which point the lender will be more inclined to accept a sizable settlement.

Debt settlement is not without its issues. It can reduce your credit score, increase the risk of litigation and take several years to complete. However, it’s the cheapest way to clear your debts without resorting to bankruptcy.

You can do debt settlement yourself by contacting your creditors and negotiating reduced sums, but you will need to have a large sum of cash prepared to pay these settlements and you’ll also need a lot of patience and persistence. There are also companies like National Debt Relief that can help, as well a huge number of lesser-known but equally reputable options. 

Who is Eligible for a Personal Loan for Debt Consolidation?

In theory, you can use a personal loan as a debt consolidation loan. In other words, instead of working with a debt consolidation company and allowing them to set the rates and find suitable terms, you just apply for a personal loan, use it to pay off your debts, and then focus your attention on repaying that loan.

This can work very well if you’re using it to repay credit card debt. The average credit card APR in the US is 16% to 20%, while the average personal loan rate is closer to 6%. A personal loan acquired for this purpose will give you more control over the total interest and repayment term. 

However, while you may pay less over the term, it’s unlikely that you’ll reduce your monthly payments. A debt consolidation loan is designed to provide an extended-term so that the monthly payment will be reduced, and unless you choose a loan with a long term, you won’t get the same benefits.

The biggest issue, however, is that you need a very good credit score to get a loan that is big enough to cover your debts and has interest that is low enough to make it a viable option. This is easier said than done, and if you’re drowning in debt there’s a good chance your credit score will not be high enough to make this feasible. 

Is it Time for Bankruptcy?

If you have mounting credit card debt, personal loan debt, and private student loans, and you’re struggling to make the repayments or clear more than the minimum amount, you may want to consider bankruptcy.

It should always be seen as the last resort, as it can have a seriously negative impact on your credit score and make it difficult to get a home loan, car loan, or low-interest credit card for many years. However, if you’re not confident that debt settlement will work for you and believe you’re too far gone for debt management and consolidation, speak with a credit counselor and discuss whether bankruptcy is the right option.

You can learn more about this process in our guides to Filing for Bankruptcy and Rebuilding your Credit After Bankruptcy.

Debt Consolidation for Bad Credit Homeowners

If you own your home, you have a few more options for debt consolidation. When you use your home as collateral against a loan it’s known as a secured debt. It means the lender can repossess your home if you fail to meet the repayments. This also eliminates some of the risks associated with lending, which means they offer more favorable interest rates and terms.

Home Equity Loan and HELOC

An equity loan is a large personal loan secured against the value tied-up in your home. You can acquire an equity loan when you own a large share of your property, in which case you’re using that share as collateral.

Interest rates are very favorable, and you can receive a consolidation loan that clears all your debts and leaves only a small monthly payment and easily manageable debt in their place.

A home equity line of credit (HELOC), works in much the same way, only this time you’re given a line of credit similar to what you’d get with a credit card. You can use this credit to repay your debts, after which you just need to focus on repaying the HELOC.

An equity loan and a HELOC provide the lowest possible interest rates of any debt consolidation loan. However, failure to meet your monthly payments will damage your credit score and place your home at risk.

Cash-Out Refinancing for Consolidation

Cash-Out refinancing replaces your current mortgage with a new, larger mortgage. The difference between these two home loans is then released to you as a cash sum, allowing you to clear your debts in one fell swoop. 

Cash-Out refinancing is often used to fund a child’s college education or a new business, but it’s becoming increasingly common as a form of debt consolidation, helping American homeowners to clear credit card debt and other unsecured debts.

Reverse Mortgages

Reverse mortgages work in a similar way to home equity loans, but with a few key differences. Firstly, they are only offered to homeowners aged 62 or older. Secondly, there is no monthly payment and no other recurring obligations.

A reverse mortgage is only repaid when you sell the home or die. There are also some obligations with regards to maintaining the home and living in it full time, but you don’t need to pay any fees and can use the money gained from this mortgage to clear your debts.

Summary: Consider Your Options

A debt consolidation loan is a great option if you’re struggling with debt. You can try a debt management plan if you have bad credit, a balance transfer if you have great credit, and debt consolidation companies if you’re somewhere in the middle.

But as discussed already, these are not the only options. The debt relief industry is vast and caters for every type and size of debt. Do your research, take your time, and make sure you understand the pros and cons of each option before you decide.

How to Get Debt Consolidation Loans When You Have Bad Credit is a post from Pocket Your Dollars.


What is a balance transfer and how does it work?

If you’re dealing with pricey credit card debt, a balance transfer could be a useful tool in your debt reduction strategy. A balance transfer is the process of moving high-interest debt from one or more credit cards to a credit card with a lower interest rate.

A good balance transfer credit card can help you pay off debt faster, since more of your payments go toward the card’s principal balance each month instead of toward interest charges. It can also save you hundreds, if not thousands, of dollars in interest, given you’ll incur a low or even 0% APR on the transferred balance for a set period of time, usually six to 18 months.

Balance transfers, however, aren’t free. Most issuers charge a balance transfer fee, and there are other factors to consider before applying for a low or 0% interest credit card.

Here, we break down how balance transfers work and provide some tips on how to determine if this debt repayment strategy is right for you.

How balance transfers work

You generally apply for a balance transfer when you apply for a new credit card. You can also wait until after you’re approved for the card, though it’s best to get the process started as soon as possible. You’ll need to know the account number for your existing balance and how much you want to transfer.

Your new issuer may approve the full amount or only part of your balance transfer, depending on your credit limit and the issuer’s transfer limits. After the transfer is approved, issuers facilitate a payoff of the existing balance.

Some issuers send payment to the original creditor, while others require you to pay using a furnished balance transfer check. Once the transfer goes through, you’ll make payments to your new creditor.

Balance transfers are not instantaneous. Depending on the issuer and a number of other factors, your balance transfer could take three days to six weeks to complete. And while your credit card issuer should be able to give you a sense of how long it will take, there’s no way to know in advance exactly how long you’ll have to wait for the transfer.

In the meantime, be sure to pay at least the minimum due to your existing creditors. Failing to do so could lead to late fees and damaged credit and could even disrupt the balance transfer in progress.

Should you do a balance transfer?

A balance transfer can be a solid debt-repayment strategy, allowing you to save on interest and chip away at your balance over time, but it’s not the best option for everyone. Consider the following to be sure a balance transfer is right for you:

  • How much do you need to transfer? Even if you’re approved for a balance transfer card, the credit limit you’re offered may not cover the full balance you want to transfer. If your balance is too big to transfer all at once, you’ll have to decide if it’s best to transfer a portion, apply for multiple cards or work with your existing creditors to get a lower interest rate.
  • Do you have a repayment plan? It’s critical that you go into your balance transfer with a plan for how you’re going to pay off your debt and make the most of a card’s 0% introductory APR period or low ongoing APR. Otherwise, you may just find yourself back where you started. Additionally, if you don’t make timely payments, you could lose your 0% APR and may even trigger a penalty APR.
  • What got you into debt? You may be motivated to pay off your debt but if you haven’t addressed what caused you to get into debt in the first place, you might use your new card to create an even bigger balance. What’s worse, you could end up stuck with a high interest rate on your new card once the promotional period ends.
  • Good credit is required to qualify. To take advantage of the best balance transfer offers, you’ll need good to excellent credit. Instead of trying to do a balance transfer with bad credit, consider a debt consolidation loan or focus on paying down your balances as much as possible before you apply to rebuild your credit score and get better terms.

When a balance transfer makes sense

Though the specific terms will vary by credit card or issuer, there are two major benefits to electing for a balance transfer.

  • You can save money on interest. A balance transfer could save you a substantial amount of money. For example, if you were to pay 17% interest on a $2,000 debt making $60 minimum monthly payments, it would take close to four years to pay off the debt. Even worse, it would cost you more than $700 in interest. (Our balance transfer calculator can help you determine how much you could save with a top balance transfer offer.)  On the other hand, if you paid a 3% balance transfer fee ($60) and transferred your $2,000 balance to a card that charges 0% interest for 15 months, you could pay off your debt in 15 months with payments of about $138 per month, saving yourself a substantial sum in interest charges.
  • You can consolidate your debts. Transferring balances to a single low-interest credit card can not only save you money and help you pay off debt, but can also simplify your financial life. If you’re carrying high balances on multiple high-interest credit cards and have a hard time keeping payment due dates and minimum payments straight, you may end up accruing late fees. In that case, putting all your credit card debts on one card can be a good move, since you’ll have just one card to keep track of and one payment to make each month.

When a balance transfer doesn’t make sense

As we mentioned earlier, balance transfers aren’t free. There are important terms and conditions to familiarize yourself with before applying for one. Here are some balance transfer drawbacks to be aware of:

  • Fees are almost inevitable. Balance transfers can be a great way to save on interest and focus on paying down debt, but they come with a cost: You’ll almost always be charged a balance transfer fee, which is a percentage of the total amount you’re transferring. According to research, the most typical balance transfer fee is 3%, but some cards charge 5%. For example, if your issuer charges a balance transfer fee of 3% and you transfer a $10,000 debt from another card, $300 will immediately be added to your transferred balance, bringing the total amount you owe to $10,300. There are a few credit cards with no balance transfer fee, but the tradeoff is usually a shorter 0% introductory APR period.
  • Promotional balance transfer APRs and transfer rates expire. A balance transfer card may woo you with its super-low or 0% introductory APR offer, but don’t be fooled: That “teaser rate” doesn’t last forever. After a set period – often six months to a year or occasionally more – the interest rate will increase to its regular rate, which could be even worse than the one you were trying to escape. You also don’t want to waste time getting the balance transfer process started. Some cards offer a lower balance transfer fee if you transfer the balance within a set period. If you aren’t proactive, you could end up seeing your balance transfer fee increase, which could cost you hundreds.
  • Multiple balance transfers can impact your credit score. You may think applying for a new balance transfer card when your teaser rate expires is the perfect solution to avoid ever paying interest on your credit card debt. While you can do that, know that multiple card applications can damage your overall credit score. When you continue to open new low-interest accounts but maintain high debt levels, lenders may see you as a risk, which will make it hard for you to borrow money for big-ticket items such as a home or car or even qualify for that second or third balance transfer card deal.

Bottom line

A balance transfer can be a useful tool to pay off credit card debt faster without incurring interest. But there are several things you need to consider to make a balance transfer work for you, including transfer fees and your financial habits.

Before starting a balance transfer, draw up a repayment plan to ensure you will pay off the balance before the introductory APR period ends. Also, avoid incurring more credit card debt. Otherwise, the benefits of a balance transfer may be null.

How to do a balance transfer by issuer

Visit the links below to do a balance transfer with your specific card issuer(s):

  • How to transfer a balance to a Chase credit card
  • How to transfer a balance to an American Express credit card
  • How to transfer a balance to a Discover credit card
  • How to transfer a balance to a Citi credit card
  • How to transfer a balance to a Wells Fargo credit card
  • How to transfer a balance to a Bank of America credit card
  • How to transfer a balance to a Capital One credit card
  • How to transfer a balance to a U.S. Bank credit card


Tips to Consolidate Credit Card Debt

Tips to Consolidate Credit Card Debt

Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

If left unchecked, extensive amounts of credit card debt can cripple your finances. The good news is there are many ways to handle debt, though each requires a dedicated effort on your part. But if you can manage to consolidate credit card debt, you will reduce your burden relatively quickly. In the process, you’ll avoid the exorbitant interest rates that accompany most credit cards. Below we take a look at some of the most effective techniques you can use to make this goal a reality.

Find Out Your Credit Score

Before you can work on improving your credit and minimizing your debt, you have to know where you currently stand.

Many credit card issuers allow cardholders to see their FICO® credit score free of charge once a month, so check out if any of your cards include that free credit score. The three major credit bureaus – TransUnion, Experian and Equifax – also give out free annual credit reports. If that’s not enough, websites like Credit Karma™ and Credit Sesame provide a free look at your credit score and reports as well.

It is vital to review your credit report with a fine-tooth comb to ensure the accuracy of the information. If you find errors be sure to let the credit bureau in question know so the issue can be eradicated as soon as possible.

Zero Interest Balance Transfer Cards

Although it might seem counterintuitive to apply for another credit card to lessen your debt, a zero interest balance transfer card could really help. These cards typically include an introductory 0% balance transfer Annual Percentage Rate (APR) for six months or more. This ultimately allows you to move debt from one account to another without incurring more interest. However, once the introductory offer concludes, any leftover balances will revert to your base APR.

These offers aren’t totally free, though. Most cards also charge a balance transfer fee that’s usually between 3% and 5% of the transfer. Even with this initial payment, you will almost always still save money over leaving your debt where it stands currently.

If you want to consolidate credit card debt, here are three different balance transfer credit cards you could apply for, with varying introductory interest rates and transfer fees:

Balance Transfer Credit Cards Card Intro Balance Transfer APR Balance Transfer Fee Chase Slate 0% APR for first 15 months; then 16.49% to 25.24% Variable APR, depending on your creditworthiness No fee for first 60 days; then $5 or 5% of each transfer, whichever is greater Citi Double Cash Card 0% introductory APR for 18 months from date of first transfer when transfers are completed within 4 months from date of account opening; then 15.49% to 25.49% Variable APR, depending on your creditworthiness $5 or 3% of each transfer, whichever is greater BankAmericard® credit card 0% APR for first 15 billing cycles; then 14.49% to 24.49% Variable APR, depending on your creditworthiness No fee for first 60 days; then $10 or 3% of each transfer, whichever is greater Take Out a Personal Loan

Tips to Consolidate Credit Card Debt

The thought of taking out another loan probably doesn’t sound too appetizing to consolidate credit card debt. But a personal debt consolidation loan is one of the speediest ways to rid yourself of credit card debt. More specifically, you can use it to pay off most or all of your debt in one lump sum. That way, your payments are all merged into a single account with your lender.

The APR and length of the offered loan and the minimum credit score needed for approval are the main factors that should go into your final decision on a lender. By concentrating on these three components of the loan, you can map out what your monthly payments will be. As a result, you can more easily implement them into your financial life.

Applying for a personal consolidation loan can have a detrimental effect on your credit. Unfortunately, most institutions will run a hard credit check on you prior to approval. However, many online lenders don’t do this, which might ease your mind depending on the severity of your debt situation.

These loans are available through a wide variety of financial institutions, including banks, online lenders and credit unions. Here are a few examples of some of the most common debt consolidation lenders:

Common Debt Consolidation Lenders Banks Wells Fargo, U.S. Bank, Fifth Third Bank Online Lenders Lending Club, Prosper, Best Egg Credit Unions Navy Federal Credit Union, Unify Financial Credit Union, Affinity Federal Credit Union Auto or Home Equity Loan

If you own assets like a home or car, you can take out a lump-sum loan based on the equity you hold in them to consolidate credit card debt. This is a great way to reuse money you paid toward an existing loan to take care of your debt. When paying back your auto or home equity loan, you’ll usually pay in fixed amounts at a relatively low interest rate. Even if this rate isn’t great, it’s likely much better than any offer you’d receive from a card issuer.

Equity loans are technically a second mortgage or loan, meaning your house or car will become the loan’s collateral. That means you could lose your house or car if you cannot keep up with your equity loan payments.

Create a Budget

Tips to Consolidate Credit Card Debt

To build a budget, you first need to figure out your approximate monthly net income. Don’t forget to take into account taxes when you’re doing this.

You can then start subtracting your variable and fixed expenses that are expected for the upcoming month. This is where you will likely be able to identify where you’re overspending, whether it’s on food, entertainment or travel. Once you’ve completed this, you can begin cutting back where you need to. Then, use your surplus cash to pay off your debt one month at a time.

It shouldn’t matter if you’re dealing with substantial credit card debt or not. A monthly spending budget should always be a part of how you manage your finances. While this is likely the slowest way to eliminate debt, it’s also the most financially sound. At its core, it attempts to fix the problem without taking funding from an outside source. This should leave very little financial strife in the aftermath of paying off your debt.

Professional Debt Counseling

Perhaps since you’ve found yourself in serious debt, you feel like you want professional help getting out of it. Well the National Foundation for Credit Counseling® (NFCC®) is available for just that reason. The NFCC® has member offices all around the U.S. that are certified in helping you consolidate credit card debt.

These counselors won’t only address your current financial issues and debt. They’ll also work to create a plan that will help you avoid this situation again in the future.

Agencies that are accredited by the NFCC® will have it clearly displayed on their website or at their offices. If you’re not sure where to look, the foundation created an agency locator that’ll help you find a counselor nearby.

Borrow From Your Retirement

Taking money early from your employer-sponsored retirement account obviously isn’t ideal. That’s means borrowing from your retirement is a last-ditch alternative. But if your credit card debt has become such a handicap that it’s affecting all other facets of your life, it is a viable option to consolidate credit card debt.

Because you are technically loaning money to yourself, this will not show up on your credit report. Major tax and penalty charges await anyone who has trouble making payments on these loans though. To make matters worse, if you quit your job or are fired, you’re typically only given 60 days to finish paying it off to avoid incurring a penalty.

Tips To Consolidate Credit Card Debt

  • If you take the time to come up with a budget, don’t let it go to waste. While you might find it tough to stick to, especially if you’re trying to cut back, it is the best way to manage your money correctly. Even if a budget becomes habit, stay vigilant with where your money is being spent.
  • Although a financial advisor will cost money, he or she might be able to help you keep your finances in check while ultimately helping you plan for the future as well. However, if this isn’t an option for you financially, stay on track with your NFCC® debt counselor’s plan.
  • There are so many ways to gain access to your credit score that there’s virtually no excuse for not knowing it. It doesn’t matter if you do it through one of the top three credit bureaus, FICO® or one of your card issuers. Just remember to pay attention to those ever-important three digits as often as possible.

Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

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