Loans for debt consolidation

0% APR Credit cards can consolidate debt better than loans.

If you are paying high interest on credit cards, store cards and loans, then a debt consolidation credit card might be a good way to improve your financial health. Many people use 0% APR credit cards to consolidate and even eliminate credit card debt.

Many lenders offer 0% APR credit cards as an incentive to new cardholders. These preferential interest rates typically last for six months, though some may apply for as long as 12 months. Some lenders also offer a low interest rate on purchases, making these credit cards very attractive indeed.

With no interest charged, it is ideal to use a 0% card as a debt consolidation credit card by becoming a credit card tart. A credit card tart is someone who moves balances from credit card to credit card to take advantage of preferential interest rates. This practice is also known as credit card jumping, rate surfing and serial switching.

How Serial Switching Works

It works like this. New customers can fill in an online credit card application form or apply offline. Provided they meet the lending criteria and have an adequate credit rating, they are awarded the 0% APR credit card. They then transfer outstanding store card, credit card and loan balances to the new 0% card. Finally, cardholders make repayments as usual. Since no interest is being charged, the money paid reduces the amount owed, making the financial picture much healthier.

The next step is crucial to using a 0% card as a debt consolidation credit card. At least six weeks before the 0% interest rate ends, cardholders need to apply for a new 0% APR credit card. Once it arrives, all they do is transfer the remaining balance to the new credit card and start the process all over again.

Over the long term, this is a good way to eliminate credit card debt. Provided that cardholders make the required repayments on time and in full, their credit rating should remain good. This means they should have little difficulty in getting new 0% APR credit cards. Many credit card companies charge a fee for balance transfers. This is a way of recovering the interest they lose from serial switchers. In spite of this, rate surfing may remain a good option for people looking to consolidate their debts.

Some people use this technique with several credit cards at once and this requires a good deal of organisation. It is essential to stick to the required payment schedule to avoid late payment fees being added to the credit card account. Not only will this add to the amount owed rather than reducing it, but it will also damage cardholders' credit rating, making it more difficult for them to get hold of a new 0% APR debt consolidation credit card.