10 Tips to Better Debt Consolidation

4. Consider Balance Transfers—Your New Best Friends

One debt consolidation method involves utilizing introductory, teaser interest rates offered by banks and credit card companies. Low or 0% interest rate accounts may be offered for balance transfers up to a specified amount, for a limited period of time. Banks may issue a debit or credit card, or open a line of credit (LOC) depending on the offer. Initially, little or no interest is charged on the newly transferred balances, however there is generally a transfer fee of 2%-3% per account.

Combining credit card balances under one low rate account can only work if the debt is paid in full before the introductory rate expires (usually 6-24 months) or the remaining balance is transferred to another new account.

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