Are you in debt?
Looking for a way to make it easier to make the payments?
Put a dent in the principal balances at without incurring interest charges?
You may be looking into getting a new credit card and consolidating you balances with a 0% interest rate.
On the surface, it would seem like a great idea, moving high-interest balances to a card that doesn’t charge any interest for a fixed amount of time.
I hate to break it to you, but trying to do a 0% balance transfer to alleviate the pain of debt may not even be an option for many of you.
Don’t get mad at me, I’m just telling you what some other writers simply won’t…
Many financial writers will gush about how money can be saved transferring balances from a high-interest card to a lower-interest one, and how much headway can be made.
Unfortunately, it may just not be as easy as it sounds.
If you are so deep in debt and far enough behind on your payments that your credit score is being adversely affected, you may just have eliminated this option from your list of options.
Why you ask?
There are 3 key reasons:
- If your credit score is negatively impacted by your spending habits on your existing credit lines, the odds are good that you will not even qualify for new lines.
- If you aren’t in a bad enough position to be denied new credit lines outright, you will most likely be offered a low line of credit on a new card.
- The advertisements you see are only for the most qualified applicants. You are not guaranteed to get those terms, and what’s more is you may not even qualify for any balance transfer at all. Balance transfers are not ordinary features of credit cards that are available to all holders. You may be offered a reduced repayment period, or a lower-than -normal interest rate, but the terms are decided on a case by case basis.
A balance transfer to a card with a lower rate will only postpone or temporarily slow the accumulation of interest.
It will all be for nothing if you don’t learn to change your spending habits and learn to use the credit extended to you wisely!
Don’t forget, these days it is harder to obtain credit.
Just because some bloggers and people in the media go on and on about how smart it would be to consolidate balances onto a low-rate card and how easy they make it seem doesn’t mean it will always be so.
Digging out of debt is a long and arduous process and takes dedication as well as an ability to recognize bad habits while taking the steps to correct those deficiencies.