Paying Off Debt Using Credit Cards? You Might Want to Think Twice About It

This article was written by Atlanta Bankruptcy Attorney Marty Adkins of the Adkins Firm. Marty has been helping people get out of debt for over two decades.



I often hear people ask the question: "Is okay to pay off various loans with my credit card?" It's easy to see why someone might find this option appealing in the short term. After all, there is something about handing over cold hard cash that seems so much more real than using plastic, and not having to deal with it for a while. These people simply aren't thinking in the long-run though, and in order to be financially responsible and successful, this is what one must do.
The idea of paying off your debt, only by taking on more debt is, in most cases, simply irrational. Honestly, there is rarely a case where putting outstanding debt on a credit card should be seen as a responsible financial decision. This shows that you're relying too much on credit, and bankruptcy might be in your future.

A Few Reasons Why It's Not a Good Idea

Your credit score will suffer!

You really need to look out for your debt-to-credit ratio. This is one of the major factors that ultimately dictates weather your credit score is good or bad. When the money you owe is greater than the amount of credit given to you, chances are, you're credit score isn't the best.

You'll have to deal with more interest!

In most cases, interest rates on credit cards are higher than interest rates on other loans you might have, like for your car or mortgage. Using a form of payment that already comes with a high interest rate to pay off other loans (even if they need to be paid promptly), just does not make any financial sense.

Is There An Acceptable Circumstance?

I'm reluctant to say it, but yes, there is. This is in the case when the credit card has a time slot in which you do not have to pay any interest. When you accept a new credit card, make sure it offers the introductory no-interest period or no-interest on balances that have been transferred. With that in mind, just know that credit card companies eventually plan on profiting from you. Many times cardholders will fail to make a payment once the preliminary period is over.
All in all, in rare cases you can use a credit card to pay off other balances, but more often than not, it's just a bad idea. Continue to make your regular credit card payments, and only use it in extreme emergencies. If you are having sincere problems keeping up with your regular monthly payments: rent, mortgage, utilities, outstanding debt, you may want to consider speaking with a bankruptcy attorney.




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