Adapt the Principles of Debt Consolidation To Your Life Situation

You know how whenever someone gets into an accident, there always seems to be a personal injury attorney hovering nearby, just waiting to hand over his card? These types of lawyers have a nickname: ambulance chasers.

Guess what: there are ambulance chasers in the personal finance world too and they are much more aggressive than the guy hanging around in hospital waiting rooms.

As soon as you make your decision to pay off debt public, they come out of the woodwork. Suddenly you are inundated with offers of loans and debt settlements for pennies on the dollar. You get emails from people trying to sell your their “patented 100% guaranteed pay your debt off tomorrow or your money back!” systems.

Here’s the truth: the best way to pay off your debt is to not use some “get out of jail free” scheme. The best way to pay off your debt is to work really hard at it and to be as diligent as possible. Scrimp and save however you can so that you can put as much as possible toward your debt. That doesn’t mean, though, that you can’t still sort of “game the system” on your own, as long as you are smart about it. You know what I’m talking about, right? I’m talking about debt consolidation, you-style.

One of the best ways to do this is with a balance transfer card. These require a little finesse because their terms are tricky. At the outset, it looks great: transfer your existing balance into this new account for NO INTEREST (for X months)! Here is what these creditors always relegate to the finest of the fine print: that interest still accumulates over your grace period. It simply does not get applied to your account until you fail to pay off your balance in time. A single penny left in your account a single minute past the grace period’s expiration time will result in all of that accumulated interest being dumped into your account for you to pay off. Worse, that interest immediately starts earning more interest, and usually at a higher rate.

But! If you’re careful, you can game this system. Here’s what you do:

First, find the card that offers you the best terms (make sure to read that fine print!) and the longest grace period.

Then, start transfer your debt to a no interest credit card.The key here is the word ‘start’. Never ever ever ever transfer your entire balance onto a balance transfer card all at once. Yes, even if you are feeling optimistic and things have been going well. Instead, only transfer over as much as you know you can pay back within that grace period.

Be practical here: start with the first number you think you can realistically pay off and then subtract 20%. This final number is the amount you should transfer.

Pay off that balance.

When you pay off the balance and your account is sitting empty, the creditor will get itchy for you to start charging again. They’ll usually allow you to transfer another amount for another extended grace period, to keep you as a customer. Repeat the process above. Keep repeating until you’ve paid off all of your debt!

It is important, of course, that you understand a couple of things about this process:

You still need to make payments to any accounts with existing balances. Otherwise you will wreak havoc on your credit.

This method won’t exist your debt from your credit history, the amount of debt you owe will still be very visible to potential loan officers, etc. All they will see is that the amount is shifting between owners. This shouldn’t impact your credit score much, as long as you don’t open too many new balance transfers. Remember: the number of accounts you have still affects your score.

Finally: this method is not fool-proof! Your mileage may vary! Still, if it helps reduce your debt, then every little bit helps, right?

Enjoy Plunged in Debt?


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  1. What a great post! This is exactly what I did when I got serious about my debt and had 2 looming credit cards that never seemed to decrease. The balance transfer card was a life-saver and a game-changer. Not only did it allow me to pay off the credit card debt I had, now it’s my day-to-day card that earns me cash back 🙂

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