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Balance Transfers
Some people turn to low or zero interest credit
cards to transfer debt. With this option, timing, discipline,
and excellent credit are required.
Many credit card companies offer these rates
as teasers - to lure you in to switch credit card vendors.
Most of the time, these credit card companies target consumers
with better credit. Just because you receive a pre-approved
offer for a low rate balance transfer doesn't guarantee that
the rate will be lower or that you will even be approved at
all.
If you do qualify for a zero-percent or low
interest rate, that promotional rate won't last forever. Most
promotional rates increase significantly after 6 to 12 months
which often leaves you once again with higher payments or
struggling to find a new balance transfer offer.
Promotional interest rates only last if you
pay on time. One late payment and the credit card company
will jack up the rate. Also look for hidden fees and charges
that can increase the actual cost of credit.
In most cases, the balance transfer game is
a short-term fix. Many people find themselves merely transferring
balances from one new card to another before each promotional
rate expires. Opening new credit card accounts every six months,
however, could negatively affect your credit rating. Very
soon, those new credit card offers you depended on might disappear.
Is
Credit counseling right for you?
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