When you see images (like the one on the left), be careful. The ads they are used in conjunction with, can help, but more often hurt you financially. Let me explain.
Today, I was looking at the website of CreditCardAssist.com. A site that despite my opposition to credit cards and any other form of debt, that I cannot totally disagree with.
Balance transfer credit cards are designed to allow consumers to transfer a higher interest credit card balance onto a credit card with a lower interest rate, which can help save money in finance charges.
When you transfer a balance to a card with a low introductory APR of 0%, the APR will typically stay at this 0% interest level for a specified period of time (assuming you make all your card payments on time), potentially saving you hundreds or even thousands of dollars in interest charges when you compare cards side by side.
If you can be diligent and pay off the debts as scheduled, a balance transfer can be an excellent tool to achieve your goals. However, it is risky. Most people who use such options or who use a debt consolidation loan, get themselves in even more debt within a few months of the debt reorganization. I believe, that is why Dave Ramsey doesn't push such a plan. In fact in many cases he will recommend that it not be done. Everyone says that they can do it, but statistics say, that the majority will end up in worse financial constraints. However, only you know your situation, if you are truly honest with yourself.
I did this a couple years ago. I moved my balances to a 0% for 6 months card and paid it off before the 6 months was up. I haven't used my cards since.
ReplyDeleteIn most cases though, I would say that it isn't necessary to do this. If you can pay off your cards in less than 6 months, you should just do it and not bother with a new card.
It's a gimmick to get you to open a new card.
One problem is, if you have a high rate balance now, it will be much harder to pay off in the same period of time and you will be giving away money on interest.
ReplyDeleteIf you lower the rate you pay it off much faster. 6-12 months of interest can add-up even on small balances.