Paying Off Debt With 0% Interest Balance Transfer Checks
With most Americans deep in debt, credit card issuers know it's no longer enough to simply send out credit card offers.
Increasingly, they're including 0% interest balance transfer checks with those promotions to sweeten the deal. By filling out a check, you can supposedly transfer your balance from a high-interest credit card - for instance, 25% or more - to an account that charges no interest for an introductory period. At first it sounds like a no-brainer. I mean, who wouldn't want to pay zero-percent interest? But the offer may be too good to be true, warn Atlanta bankruptcy attorneys.
Sure, sometimes it works out. If you take advantage of all that cash you save on interest by using it to pay down debt, you could potentially lower your balance by hundreds--even thousands--of dollars a year. So even when the introductory rate expires and you go back to paying 20-plus percent, you're in a better place. With an overall smaller balance, you'll owe less interest no matter what your rate.
So what's the problem? Most of us don't have that much discipline. We get used to not paying interest, and we use the money we save for other things, from groceries to gas to paying the mortgage. Before we know it, our low rate is expired and we're back up to an interest rate almost as high as before. On top of that, most balance transfers require an upfront fee, even the no-interest ones. It may be worth the cost if you can use the lack of interest to significantly lower your debt. But if not, that fee is just another burden.
Whether a balance transfer is right for you ultimately depends on your point of view. If you're ready to use that 0% as a tool to lower debt, it can give you the jumpstart you need. But if you're merely hoping for a convenient shortcut--one that doesn't require changing your spending habits--you're in for an unpleasant surprise when your rate bounces back up. In that case, you're better off with a long-term solution. Bankruptcy can permanently lower the amount you pay in interest simply by lowering your debt. Wondering if a bankruptcy plan could provide the financial freedom you've been looking for? Find out with a free personal debt analysis courtesy of a professional Atlanta bankruptcy attorney.