0 Balance Transfers

0 balance transfers can be used as a strategy for lowering your credit card payments when the interest rates on your your existing cards gets too high, but there are some pitfalls you need to avoid ... 

0 balance transfers are a popular feature on credit cards, especially as part of introductory rates. People use them when they get new credit cards, because their old ones have rates that are too high and are crippling them financially. Typically, new credit cards will have a lower rate than the one that you are paying, at least for the first six months, to lure you in and get you to use their card instead of the old one. They use o balance transfers as an incentive to get you to switch your old balance to their card at 0 apr for you. This is deffinitely a good deal for you, if it really is a low apr card.

The problem is that it can be too good a deal, and you can get into further and further debts, until you cant get any new credit cards with 0 balance transfers and low apr. As a result, you'll have to start paying a high rate for your credit card, instead of the low rate you've been paying, and also pay lots of money to transfer your balance. This happened to me once. I had lost my job while paying for my house, and was temping at a low end service industry job. Normally, it would have been enough to live on, but with my mortgage payments, I was racking up debt. Instead of dealing with it, I used low apr cards with 0 balance transfers to cover my high interest rate debt. This was a good idea for the first few months, but soon I began racking up debt faster than I would have thought possible.

When my six month low apr offers from my credit cards ran out, I tried to get new 0 balance transfers cards to move my debt around, only to find out that no one was offering me them any more. They didn't even come in the mail! I was falling very quickly in to heavy debt. Fortunately, I found a new job in an ad agency, and quickly began to make an income similar to what I had been making before, but the damage had already been done. Six years later, I am only just emerging from debt that I accrued during that period. A 0 balance transfer credit card can be very useful, but it is no substitute for responsible spending! In the future, I definitely will be more careful.

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