Using Credit Cards for Debt Consolidation
Most adults in the UK now carry at least one credit card, and millions of people carry a substantial balance on one or more cards. It's well known that credit cards aren't a cheap way of borrowing, but it's less well known that you can use them effectively for consolidation.
The type of card you'll need to apply for will either have a long term 0% balance transfer deal, or a 'low rate for life' offer.
With either of these types of card, you can transfer debts across from more expensive cards, cancel the old paid-off ones, and enjoy lower repayments into the future.
With a 0% deal, you can use the offer period to make serious inroads into paying off your debt, as everything you pay will go towards reducing what you owe rather than paying interest.
With a long term, low rate deal you'll still have to pay interest, but it will be at a much, much more attractive rate than the standard rates available on general purpose credit cards. In fact, the rates are often low enough to make it worthwhile using these cards as an alternative to unsecured loans.
The drawback is that with a credit card, you have no structured repayment plan - the debt can hang around for a very long time if you only make the minimum repayments, and so you could end up paying more interest overall in the long term than with other kinds of fixed-term finance.
Site is for information only and does not constitute personalised financial advice. E&OE.
