0% Interest Rate Trap
Why are credit card companies so eager to offer you 0% balance transfer to you? Why do they make it look so tempting to transfer that debt to there 0% credit card? What does someone in debt see when they are offered this amazing 0% balance transfer offer? What they see 12 months of interest free breathing room, where the payments that they make during that time go towards principal. But the TRAP has been set.
The Fees:
If you don't read the fine print that wonderful 0% balance transfer that you were offered may come with a balance transfer fee of 3%, which will cut into how awesome of an offer really is. Some credit card have caps on this fee and other do not so be careful. Be sure to read the fine print, you might be tempted to do the transfer anyway because your credit score already took a hit for the new card. Don't put yourself in this situation.
Ever think what your interest rate is going to be after the promotion?
If you have a 9.99% interest rate for life on a credit card , it may not make sense to get a 0% interest rate for a year and then have it spike up to 19.99% afterwards does it? Especially if you plan on taking more than a year to pay it off. However, if you think the 0% will let you pay down the debt so fast that you can get rid of it within the promotional time period, then this may be a good deal. You need to do some number crunching to figure out if it really pays to transfer that debt.
The credit card companies trust you to fail.
You are in debt for a reason, right? You spent more than you earned. It is something the credit cards depend on. They depend on the fact that the probabilities are telling them that offering you a 0% balance transfer is going to earn them way more money in the future since you are in debt now and will not be able to pay off that balance transfer. What you need to do is to make sure, before you take on the offer, that you can change pay off this debt, that's the biggest trap of all. In the long run you might get yourself in even more debt than you are in now. The best thing you can do is debt consolidation to consolidate your debt into one low monthly payment. You will then know what your monthly payment is going to be and get yourself out of debt faster.
Writing financial and debt consolidation articles for over 10 yrs. Been in the credit counseling [http://www.kimberlycredit.com] biz for as long as well
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