Financial Experts Advise Caution with Zero-Percent Balance Transfer Credit Cards
Posted on January 30, 2012
Now that the spending holidays have passed, there is a lot of consumer concern about eliminating the debts incurred on cards and starting credit repair initiatives. For consumers that overspent and now face the inability of being able to repay their debts, it is important to explore debt relief options before choosing one, especially for those considering a zero-percent balance card.
Balance transfer credit cards give consumers the option to transfer existing card balances from other cards with the theory that it is easier to pay down one debt, especially at a zero-percent interest rate. However, there are some precautions to take with a zero-percent balance transfer card.
Consumers are being advised to look at every detail of the credit card offer before signing on to transfer balances. What you don’t know about balance transfers could cost you more in the long run. It is advisable to first look at the length of time the 0% rate is being offered and be assured you can repay the balance within that time frame. Many consumers fail to realize the zero-interest offer is only for a promotional period. Once that time frame ends, the interest rate could be much higher than you can reasonably afford.
The other important aspect of balance transfer cards consumers need to understand concerns the fees for card use. Transferring of balances from other cards is not without fees. If a consumer’s credit limit is not enough to accommodate the balance amounts and the fees, consumers may be setting themselves up for failure. Over the limit fees and other penalties can add up quickly, destroying your debt elimination plans and ultimately ruining your credit score.
Personal finance experts note that balance transfer cards can be one option for assisting you in a debt relief strategy and help you to repair bad credit. However, unless the card is relevant to your financial life and you have the ability to use the card responsibly, tacking on another card to your credit profile may not be the best personal finance decision to make.
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