Zero percent Balance Transfers can damage your Health
What you are about to read may make you reassess your attitude
to zero interest balance transfer offers. I will show how these
balance transfer offers are pushing more and more people into
serious financial difficulties and I will suggest a few ideas on
how you can manage your debt better.
Credit card debt is rising at an alarming rate and many people
are now getting into serious financial difficulties. One of the
reasons is the promotion of no interest balance transfer offers
and interest free initial periods.
Like most people, I've been tempted by the these offers to
change my credit cards. I've taken them up on their offer and
moved my credit card debt and, for a limited time, had no
interest to pay. But "just in case of an emergency" I usually
hang onto my old card.
Then something happens, an unexpected bill, or a wedding or
birthday gift I've forgotten about. "Never mind" I tell myself
"I can put it on the old card - there's plenty of credit on
there so it's no problem."
A few months and a few unexpected bills later the interest free
period runs out I have to pay interest on both my new card and
the old card. Now I'm worse off than when I started but that's
no problem as I can look for another card offering another
interest free period and zero interest balance transfers.
It's so easy and the banks and credit card companies are so
eager to lend the money that it becomes routine, until that is,
something goes wrong. You could fall ill and be off work, or,
you could lose some overtime and your wages fall, or maybe that
big deal you were relying on falls through.
It may just be that the credit card companies decide you have
too much outstanding on credit cards and you would have
difficulty paying the repayments, or simply they spot that you
are a regular churner of the debt and they don't want your
business.
Whatever the reason the result is that you have all the interest
to pay and you start to struggle with the minimum payments and
miss one or two. Because you've missed payments it becomes even
more difficult to find the next interest free balance transfer
offer.
Now you have a real problem but it is one that can be avoided.
I could suggest that you don't use credit cards but I suspect
that would not be acceptable, and I am not going to suggest you
ignore the 0% offers - that would mean you paying interest when
it is not needed.
The simplest way to benefit from these balance transfer offers,
but keep your card debt under control, is to cut up your old
card when you switch to a new one.
That way you benefit from the 0% offer but minimize your
exposure to higher debt.
Once you have cut your card up though, it is essential that you
contact the card issuer and close the account. Until you close
the account the card issuer will continue to tempt you with
special offers to use your old card.
Another tip is to never pay just the minimum payment. Always pay
the maximum monthly payment you can afford. Reducing your
payments simply pushes back the time when you have to repay and
in the long term increases your payments. Use the interest free
period to reduce your debt to the minimum and if possible clear
the balance.
Credit card companies don't offer an interest free balance
transfer because they are feeling generous. They do it because,
in the vast majority of cases, they will be able to charge you
more in the longer term. Use interest free credit to benefit you
not the credit card companies.