Alternatives to a 0% APR Credit Card:
Interest-free credit card transactions appeal to many consumers as a way to alleviate heavy credit card debt with high-interest rates. But these transactions are not a panacea for the credit crunch; maybe there are better solutions for you.
Remember that the zero percent interest rate on these credit cards is for a limited time only. After six months or a year, a higher interest rate starts, possibly higher than the cards you have now. These cards usually have a single balance transfer, usually about 3% of the amount due. Calculate everything before you do anything, or consult our tool to calculate the actual cost of a balance transfer.
There is also a risk that you will no longer have to use the promotion period to repay the principal.
If you really want to pay off your debt and limit your extra expenses, there are other alternatives to explore:
A home loan or credit limit
If you have good credit, fixed assets, and fixed income, a home loan or line of credit can be a great way to pay off credit card debt at lower interest rates.
It may be faster than getting a traditional bank loan, but it is important to keep in mind the differences between the two. A home loan is a single loan that is repaid at a fixed interest rate. Payments are greater than working capital (HELOC) because you pay interest and interest.
HELOCs work much more like credit cards. You have a fixed amount that you can borrow and repay as much as you want. However, you charge a variable interest rate that the market follows. Monthly payments during the initial ‘withdrawal period’ only cover interest, so the minimum payments will be lower.
It has a lower interest rate than credit cards or even a traditional bank loan. One major drawback: since your home is used as collateral by these secured loans, you are now putting it at risk.
Unsecured personal loans
A personal loan without security from an online lender, bank, or credit union may be the right option to consolidate debt if you have a good credit line but cannot pay off your debt within the 0% credit card period.
Bank loans can vary widely and banks will calculate your creditworthiness and income before approving a loan.
Look at credit unions first. Because they are not profitable, they can charge lower rates than banks, and interest rates on federal mortgage loans are 18% higher.
Online credit providers offer good credit to borrowers with bad credit. Lenders with excellent credit ratings will find rates at which most banks perform better, while lenders with low credit rates can find rates as high as 36% (such as the affordable limit), even from trusted lenders.
You can find a moneylender who does not check credit but expects to pay a triple-digit interest rate.
Rather, consider getting a co-signer with good creditworthiness. But by default, you two are in danger. Instead of taking on debt, you can hurt your finances and your relationship. Or maybe you need time to increase your credit score – this is not an immediate solution, but it should not take years.