How to Consolidate Your Post-Holiday Debt With a Balance Transfer

This guest post was written by Jason Bushey. Jason runs the day to day operations Creditnet.com, a free online credit repair authority.

A few weeks back, Average Joe blogged about post-holiday distress and how the holiday season has wreaked havoc on credit card debt for more than a few of us.

Now that the first post-holiday credit card bills approach the all-dreaded due date, it felt like a good time to revisit the fact there is an easy way to consolidate and SAVE when it comes to paying back that holiday debt: make a credit card balance transfer.

But first, why is it worthwhile to consolidate your debt, whether it’s post-holiday or otherwise?

For starters, consolidating your debt makes life a little easier. Think about it; fewer due dates to track and fewer interest fees to take into account of every 30 days. That puts less pressure on you and your calculator, and makes budgeting your personal finance formula less of an algorithm and more simple math.

Not to mention you can save a ton on interest fees if you’re credit is strong enough. Here’s how it works…

The easiest way to consolidate your credit debt and save on interest fees is to transfer a credit card balance you’re paying interest on to a new, 0% interest credit card. The fee to do so is small – generally 3% of the total balance you’re transferring – and the savings on interest fees are significant.

The average 0 interest intro period lasts anywhere from 6-to-18 months, depending on the card. The better your credit, the better chance you have to get approved for a credit card with an extended introductory period.

Before you  apply for a balance transfer credit card, there’s a little homework to be done…

First, you should determine how long it will take to pay back most or all of your credit card debt when you’re paying zero interest. Figure out a simple payment plan – maybe you’ll pay back $100 a month, without fail – and then calculate how many months it will take at this rate to get to zero credit debt.

Once you’ve determined how many months it will take to pay down your holiday debt via a balance transfer, research which credit cards have an intro period long enough to cover your payment plan, and make sure that this intro period includes balance transfers at zero interest.

Once you’ve found the right card for you, the process gets a little simpler. As soon as you receive and activate your new card, initiate the transfer with your new credit card company. This can be done online or over the phone, but you should note that it takes up to two weeks for the balance transfer to take effect on your old card. (So don’t ignore your latest credit card bill on your old card, if that date overlaps with the transfer you’re making.)

As soon as you see that the transfer has successfully taken place, pop out the champagne and celebrate! Just kiddin’ … Well, I suppose it is cause for a celebration, but there is still work left to be done with your new 0% interest credit card.

Many credit cards require that you make on-time payments to remain eligible for their intro period; basically, do as you’re supposed to and you won’t have an issue. That said, it’s going to be mighty tough to pay back your holiday debt in a timely manner (i.e. within your zero interest intro period) if you continue to make new purchases on your credit card…

Yup, it’s time to take a break from credit card spending.

Give yourself a couple months – or as long as it takes, really – to catch back up on your personal finances by putting the credit card away. We know; it’s new, shiny, and it’s got all kinds of bonuses attached to it. But the only way you’re going to pay down post-holiday debt is to cut your credit purchases and make significant payments each and every month.

So now that you know how to consolidate your debt with a balance transfer, it’s time to shake off those post-holiday blues and get back in the green. There’s no use in paying back Christmas 2012 through the summer of 2013, especially if you’re paying interest. Cut your interest fees, pay down your debt directly and you’ll be back in the holiday spirit. (Christmas in July, anyone?)