Rolling over credit card debt: Dos and don’tsBanks offer many types of credit cards and it is easy to get into the habit of swiping. It is even easier to spend beyond your capacity when using one. Credit card debt is a very real problem that can place undue strain on your budget. You can reduce the high-interest burden by rolling over or doing a balance transfer of your debt. In simple terms, this is switching over your balance payment to a credit card or other financial instrument with lower interest. For example, you can go from paying interest of 19% p.a. on your balance to 0% for a fixed period.

Here are a few things to keep in mind:

Research the credit cards and offers available before zeroing in on your new low-interest credit card. Be swayed by offers such as low or no annual fees and other incentives to choose your new credit card. Also remember that the longer it takes you to pay off your credit card bill, the more it will cost you in interest.
Try and pay the maximum possible amount you can afford each month. Make minimum payments. Not only will it feel like a never-ending cycle of debt to be paid off, but you will also run out of funds on your credit card. The faster you spend, the lesser money you will have and if you don’t replace it at the same pace, you won’t have any available cash to spend.
Remember that credit card rollover is not the same as credit card payment. You still must pay all your dues and the interest on the new card. Forget to pay the new credit card bill promptly to ensure that you will never suffer from credit card debt again.
Set up a budget to get the debt paid off within the introductory time frame provided by your new balance transfer card. Make new purchases on the credit card.

Other options to pay off debt – personal loans and EMI

Personal Loans: Most banks will allow you to take a personal loan and use that money to pay off the card outstanding. Interest will be in the range of 14-18%. If you already have a home loan, you can also explore the top-up loan facility to pay off the credit card debt.

EMIs: Some banks allow you to convert credit card debt to the EMI option for tenures like 3/6/9/12/24 months. The interest can range between 13-18% depending on the lender.

Credit cards are double-edged swords and must be used wisely. It is important that you pick the right credit card rollover deal before you go ahead and apply for a card. If you pick a credit card that does not give you enough time to pay off your debt in full, you will have to pay the standard rate of interest once the promotional time-period has expired.

Once you roll over your debt, it’s important to stay within your means and not run another debt cycle before paying off the existing debt.

Staff Writer

This article is written by RupeeIQ editorial staff.