Make your credit card work for you

Make your credit card work for you

Not keeping track of your credit balance can be a hard but an important lesson many individuals can learn from.

Thanks to interest and fees, many individuals may pay for more things than they care to admit. And with easily available credit cards on the rise, it is easy to fall in the trap where you rack up more debt than what you feel comfortable with.

Generally, there are two types of debt traps to avoid. The first is paying more than what was intended in the first place. The second is carrying so much debt that it begins to impact on your personal finances and is a burden on the budget. The more taxpayers avoid these kinds of debt, the more chance they have of growing and getting ahead of their finances.

Transferring debt from one credit card to another can be an excellent alternative to save hundreds of dollars because of a much lower interest rate. However, because this solution can come with some unpleasant surprises, it is important to understand how transfers work.

Upon transferring a credit card balance, the new bank pays the debt on the old card. This means that the individual now owes the new bank the money on a different rate. It is important to acknowledge how long that special rate will last, because if an individual carries the transferred balance beyond that, they will ultimately fall into paying a much higher rate all over again.

It can also become complicated when an individual makes purchases and cash advances on their new card after the transfer. Because they are not usually part of the low-rate deal, it is more than likely that the credit card owner will receive the standard, higher rate.

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