When it comes to debt consolidation loans, there are several ways to get low interest rate money. One of those ways to consolidate debt through a family loan, another way is to seek a personal loan from a credit union which usually have lower interest rates then credit cards. However one often over-looked source for debt consolidation loans is to use a credit card.
Use Convenience Checks Provided by Credit Card Companies
Many credit card companies periodically offer their customers something called “convenience checks.” These credit card checks usually offer a period of low interest on the money that the credit card holder wishes to borrow. That low interest rate usually lasts from a period of 6 to 18 months. After which, the borrowed money then reverts to the current APR on the credit account.
Plan Debt Consolidation Wisely
The credit card companies are counting on the fact that consumers are going to bite off more than they can chew. It might sounds nice to consolidate $10,000 worth of debt from 19 percent down to 3.9 percent, however, once that term is up, the APR might zoom right back to where it was or even higher.
Determine a reasonable monthly payment that can be made against the amount the convenience check was cashed for in the first place. For instance if a $3600 check was written that has a low interest rate for 18 months, make sure it is feasible that the entire $3600 will be paid off in that time frame. In this example that works out to $200 per month plus the associated interest. If the debt isn’t cured by that time it may defeat the purpose of getting the debt consolidation loan in the first place.
Factor in Balance Transfer Fees
Balance transfer fees used to only be associated with transferring a balance from one credit card to another. Now credit card companies have begun attaching them to convenience checks as well. Balance transfer fees tend to have a few of 3 or 4 percent with no maximum associated. That means on the example of a $3600 loan, one must factor in paying an additional $144 for that loan. (If the balance transfer fee was 4 percent.)
Use Convenience Checks for Fast Cash Advances
Convenience Checks are most effective when someone needs cash in a hurry and also plans to pay off the loan before the promotional period expires. Getting a loan that carries an interest rate of just a few points for 18 months is one of the cheapest ways to get money. Just be sure that the balance is paid off in that time frame to stay ahead of the credit card companies.