When Credit Cards can get you OUT of Debt

This is a bit of a strange title. You might be thinking ‘How on earth could a credit card get you out of debt?’ Surely credit cards do the opposite and tempt you into getting into MORE debt? Well not always.
You might remember reading a few months back that Mrs Scot and I got a new credit card and decided to whack all of our furniture purchases for our new house on it. Our justification was that we had an immediate requirement for the furniture – to enable us to invite family and friends over and to host dinner parties and enjoy our new house – and that we were approved for a card with 0% interest on purchases for 18 months. We calculated that we could (quite) comfortably afford to make repayments and theoretically should never have to pay a pound of interest!

That post was slightly controversial. Quite a few people disagreed with our strategy and deemed it too risky. I think I was called irresponsible on Twitter… Too bad – we did it and we have made great use of our furniture to date. Furthermore, we are well on schedule with our payments and have stuck to our original plan. In addition to this new card, we also have a fantastic 0.5% cashback card (also 18 month interest free) that we use for our monthly expenses, before clearing the balance in full prior to any interest being charged. I happily volunteer to pay for things on behalf of friends / colleagues where possible and claim the money back. 0.5% really adds up… Trust me I have about £40 cashback due. To summarise, I take full advantage of the perks that credit cards have to offer!

This got me thinking; there must be some other great ways to take advantage of credit cards… even for those who are already in debt. Credit card lenders are crying out to give you money!  If you compare credit cards, you don’t need to look hard to find a plethora of interest free balance transfer deals on offer! At time of writing, there are interest free deals for up to 23 months on offer with an initial fee as low as 2.8%. Consider the following situation.

A non-savvy Scot (most Scottish people are waaay to Frugal/stingy to be non-savvy) has credit card debt of £10,000. He is currently paying interest at a rate of 20% p.a. This debt is currently costing the non-savvy scot £2000 per year – or £167 a month! The initial fee on an interest free credit card would cost only £280 – that is less than two months interest in his current situation!

My point is that even if you don’t think you can pay the debt off within the interest free period, it will sure as heck give you a break! Unless you have a super low APR or can pay the debt back in only a couple of months – it’s a no-brainer! These offers are not always exclusive to new customers and are often available to people with a range of credit profiles. If your debt is spread around multiple cards, you could perhaps even consider transferring these into one place. Quite often one grand total figure is more alarming and acts as great motivation to make some payments!

Forget debt consolidation, if you have credit card debt consider the o