Consolidating debt

If you have a balance on a credit card, a balance transfer could be a great way to save money by reducing the amount of interest you are paying every month. It involves moving all or part of your debt from one credit card to another. The benefit of doing so is that you can take advantage of a lower interest rate, or paying no interest at all, for a certain period.

Transferring a balance can also be useful in helping you keep track of the total you have borrowed by having it all in one place. However, it’s not for everyone and there are some key points to look out for, including:

• Be mindful of your credit score, which affects your credit-worthiness and what you can borrow in the future.
• See if there is a service fee for the transfer (usually around 2-4%).
• Be aware of how long the interest-free period will last and any potential step changes in interest rate thereafter?

If you can consolidate your debt onto a lower interest rate, you’ll be reducing the amount of interest you’ll pay every month. Ultimately this will save you money in the long run and help you to pay off the debt more quickly.

For further information visit the MoneyHelper website.