How to Use an Open Line of Credit to Pay Off Credit Cards
- 1). Compare interest rates and fees on all open credit lines in your name. Some creditors charge balance transfer and annual fees. Frequently, creditors will promote a low introductory interest rate on balance transfers that expire after six months to a year. Read the fine print to ensure that you will be able to pay the balance prior to the rate increase. Choose an account with no fees and an interest rate that you're comfortable with.
- 2). Contact the creditor who issued the open credit line to discuss your options for debt consolidation. Some accounts are open-ended, providing unlimited access, while others may require special permission prior to use. Some banks require annual account updates for personal loans before issuing an advance. Your particular lender will be able to advise you of any additional information required to begin the process.
- 3). Request a balance transfer to pay off your credit cards, consolidating them to one account. Provide the lender with your credit card account information including account numbers and balances. The lender will issue payments directly to the credit card companies on your behalf. Be sure to ask when the payments will be made. If your credit card bills are due within a week, coordinate the transfer to avoid late payments on your credit cards.
- 4). Follow up with your credit card companies after one week to ensure that the balance transfers were completed and that their records have been updated accordingly. Avoid closing these accounts unless you are likely to charge high balances again. These cards can be used for small purchases once every six months to remain open. Closing the account may decrease your credit score, especially if you've held those cards for a number of years.
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