Kickstart your financial goal and start repaying your debt in 3 weeks with 5 easy steps.
If you’re having trouble keeping up with multiple credit card and loan payments, a balance transfer card can help you with a low interest rate and a single monthly payment — but the rates can jump up when the promotional period ends.
Step 1: Collect the information you’ll need.
Week 1. Start by collecting the information and documents you need to calculate your expenses. It may seem a little tedious at first, just know this exercise is going to be a crucial step to understanding (and maybe re-evaluating) where your money is going.
Start by collecting these:
- Outstanding bills and expenses. Phone, utility, memberships etc.
- Your bank statements. You can download these online at most banks or visit a branch if you don’t have an online account.
- Any other important financial records. This includes bills, final notices and receipts
Next, let’s exercise our bookkeeping skills:
- Write down your expenses for the past month. You can draw this out on paper or start a new spreadsheet to stay organized.
- Add everything up. This’ll give you a ballpark figure for how much you should be budgeting for expenses each month. To be as accurate as possible, calculate your expenses for the last three months and find the average.
- Calculate your income. If your expenses exceed your income, you need to re-evaluate. Consider the expendable costs you’re currently engaged in and think about the costs/luxuries you can do without.
Back to top
Step 2: Check your credit score
Week 1. Once you know how much you owe and how much to budget, you can start considering which debt consolidation solution offers you the most value. Before you make a decision, you’ll need to consider which options you’re eligible for.
Most debt consolidation alternatives require cardholders to have a good credit history. If you don’t already have a copy of your credit file, it’s easy to order one for free.
If you receive your credit file and find that your score isn’t up to scratch, you might want to improve your credit score before you apply for a new credit card. Keep in mind that rejected credit card applications can have a negative impact on your credit score, so rushing the process and applying for a card you won’t be approved for could backfire.Back to top
Step 3: Compare, compare, compare
Week 2. When comparing balance transfer credit cards, there are a few key questions you should ask yourself to determine which card is right for you:
- When does the promotional offer end? If your card comes with a 0% offer, it’s likely that it will only last for 6 to 24 months. Calculate whether you could repay your entire balance by the end of this period. If not, consider a card with a longer promotional period or a debt consolidation loan.
- How much can I transfer? Most cards only accept balance transfers up to a fixed amount (or a percentage of your total debt) If your balance exceeds this amount, then you’ll be unable to transfer the entire amount.
- Who can I transfer from? Most providers won’t let cardholders transfer balances from an existing account with the same bank. You might also find that you’re unable to transfer debts from partnered, affiliated or co-owned banks. Confirm which banks you can transfer between.
- Other fees and features. Details such as the annual fee, interest rates on purchases and rewards programs could also impact how you use the card during and after the balance transfer is in place.
- Eligibility requirements. Make sure you earn the minimum income requirement, have a good credit history and meet any other conditions before applying.
Compare balance transfer credit cards
Step 4: Apply wisely
Week 2. Once you’ve compared your credit card options and decided on one, it’s time to apply for your card. Click on the green “Apply now” button on the table to be directed to a secure online application with your preferred bank.
Most online applications will take approximately 10 to 15 minutes to complete and submit. To make sure the application process goes smoothly, ensure that you meet the eligibility requirements and have all of the required documentation on hand before beginning the application. If you apply online, many providers can you give a response within 60 seconds or so based on the information you have provided. If you’re approved, you’ll receive confirmation and information packages regarding the card and your account. If there has been a problem or the provider needs to cross-check some information you’ve provided, your application status may be left pending. If you haven’t received any feedback for a few days, contact the provider directly to discuss the status of your application. If the card has a promotional balance transfer offer, it’s best to apply for the balance transfer while you’re filling out the rest of the application so you can request that your debt is transferred to your new account as soon as possible. By doing so, this will allow you take advantage of the full length of the promotional offer. Have the details of your transfer, including how much you need to transfer and where from, ready before beginning the application. If you’ve decided to close your old account, you’ll also need to contact your old bank to organize this.
Pro-tip for balance transfers
If the card has a promotional balance transfer offer, it’s best to apply for the balance transfer while you’re filling out the rest of the application so you can request that your debt is transferred to your new account as soon as possible. By doing so, this will allow you take advantage of the full length of the promotional offer.
Have the details of your transfer, including how much you need to transfer and where from, ready before beginning the application. If you’ve decided to close your old account, you’ll also need to contact your old bank to organize this.
If you haven’t met the eligibility requirements or failed to provide the necessary documents, you’ll receive a notification that your application has been rejected. If your application has been denied, don’t apply for another straight away. Take the time to understand why your application was rejected, compare your options and wait a few weeks before applying again.
Remember that multiple rejected applications will have a negative impact on your credit score, so you’ll want to avoid applying for more than one card in a short time frame.Back to top
Step 5: Start consolidating
Week 3. If your application has been approved, you can expect to receive your card within one to two weeks. If you applied for the balance transfer at the time of application, your balance should’ve transferred to your new account.
If you haven’t already, spend the time in between approval and receiving your card mapping out a realistic budget and set of goals that’ll help you keep your monthly payments on track.
Use these 3 simple rules to keep yourself moving forward:
- Set monthly goals.
- Use calendar notifications to remind you when payments are due.
- Set a final date for when you’d like to have your debt repaid — preferably before the promotional period finishes.
If you’re having trouble staying on top of multiple credit card and loan payments, consolidating your debt can help you regain control of your finances. Just make sure that your new interest rate is low enough to make it worth your while.