The Problem With 0% Interest Debt On Balance Transfer Cards

Let’s say you owe on your credit card right now $5,000 and the card is basically maxed out and you paying 25% interest and you’re paying each month about $100 as minimum payment. Is it okay to move that debt to a balance transfer credit card if they are going to charge you 0% interest, or should you keep it where it is?

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1. What is a balance transfer card
– A balance transfer in my normal terms
– Is a card that is designed to transfer debt from one place to another place
– And the company that offers these cards, benefits because they 3% upfront, and most people will not be paying off the balance in full, and you can also potentially get other products that the company offers

The customer likes it
– Because for 12 months to sometimes even almost 2 years
– You get to try to pay off your debt without having to pay any interest ( that’s huge )

2. What is the problem with this
– The problem is that the people that usually have to take advantage of these deals
– Have an underlying issue which is bad money management
– And whenever they transfer the balance from one credit card to the next, effectively they just open up a new line of credit basically

some folks:
– Use the old line credit to get into more debt
– And then don’t even pay off the new one they have in period
– And they end up just getting into more debt

3. People that take advantage and the correct way to do it
– First set a goal a realistic one
– Once you’ve transferred the balance close the credit card to prevent going into more debt
– Don’t use the new card for anything just make automatic payments

Realistic Goal:
– Divide the amount of money you owe by the amount of money you have been giving to pay this off interest-free
– So $5,000 divided by 238 dollars or so
– If that’s not doable lower the number or a little, if you can do in less time then even better

Close the Other account:
– If you’re old credit card now has a zero balance or small one, pay it off first and then close it
– This way you don’t get stuck increasing the balance

Don’t fall for the trick
– A lot of these cards come with purchase offer also, of 12 months
– So they give you a line of $7,000 and you transfer 5k from debt
– They will let you buy things with that 2k and not pay interest for 12 months
– But then you’ll be in a deeper whole
Tip: the goal is to be debt-free

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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