The 0% APR balance transfer option is for the person who has a high interest credit card and a card balance that is pushing pretty close to the maximum limit. Taking advantage of the zero APR balance transfer is a smart first step for anyone seeking to reduce overall credit card debt.
The clear advantage of the 0% APR balance transfer credit card is that it saves many dollars in interest in just a matter of about six months. Without having to focus so much on the interest, you have a fighting chance to pay off a balance.
Generally, the payment on the new account you receive after you do the 0% balance transfer will be lower than the interest bearing payment you made on the old account. It is wise to use the money that you save to apply toward your principal balance.
Many have also used the extra cash to build more cash flow on a monthly basis. It may make a borrower feel good to have access to cash, but it does not put a dent in debt; and the longer it is accessible, the more tempted many people are to spend it and create even more debt. This is exactly what the credit card companies are counting on. They want you to use your new 0% transfer card to by additional things that generally don’t get the same treatment as the balance of the transferred debt. Many times, new charges accrue interest at the normal interest rate.
Naturally, a strong resolve and a commitment to actually paying off the credit card balance is the only thing that will make consolidating debt with a new credit card have a significant impact. You have to want to get yourself out from under your debt.
If you use the 0% APR balance transfer card option, you should be aware that there is often a balance transfer fee or an annual fee for the card. Be prepared for the fees and make sure that any deal you decide to take makes sense financially. Additionally, applicants should always read the terms and conditions carefully, since most offers of this kind are time-limited. Usually, after three or six months, an interest rate is added back to the card or to the transferred balance.
If you have not used the time wisely to pay down the balance, you are right back where you started – with high interest on a card that still has a balance. This can defeat the entire purpose of the 0% APR balance transfer.
Related posts: