You are going through your mail when you come across the credit cards 0 balance transfer offers. Today you got a couple in the mail, and just before you throw it into the recycling bin, you hesitate momentarily. Should you take advantage? Would this help you out in the long run?
This decision really depends on your personality. If you love to spend, and use "retail therapy" as a way to cope with stress, then this may not work for you, or could get you into worse trouble.
But if you have just had some bad luck with finances, such as job cutbacks or job loss, or that old car of yours needing huge maintenance, or that chimney falling off the roof, then you can easily rack up some balances on credit cards, and these 0 balance transfer offers could be the ticket to getting out of debt quicker.
It can take some time and effort to make these work, but if you keep track and good records, then these balance transfers can work totally in your favour. Example: You open one of these offers, and they are offering you up to $7500.00 dollars for zero interest for 14 months. (Some of them will come up with the oddest length of time, but beware of ones that are less than a year unless you think you can pay them off by then). There may be an initial transfer fee, but if you owe $7500.00 dollars on any other card or combination of cards that you are not paying off in full every month, then you are likely paying hundreds in interest each month.
If you tend to only look at your bills for a fleeting moment and just pay the minimum, chances are you are paying very little on the balance, and now it will feel like you are just "renting" that money!
Many of these credit card companies are hoping that you are just too busy to notice. With long days at the job, kids, homework and more, it can be hard to find the time to really sit down with your bills and figure out just where you are at.. or maybe you cringe at that idea, and just keep paying the minimum.
But if you take the time, and sit down with your bills, and find the ones with the largest interest rates, you can see just how much of your minimum payment is actually going to interest and very little of the balance is being paid off.
So, figure out how much you can put onto this 0 percent balance offer, and pay off these higher interest rate cards and bills.
Next Step - Now get a calendar and count the months this 0 balance transfer offers on credit cards is good for. If it is for 14 months, then count into the next year up to 13- 1/2 months, then mark it on the calendar in red. This is the date this money needs to be paid off by or you will find that zero interest credit card will suddenly take a double digit hike upwards!
Monthly Payments - Work out exactly how much per month you need to pay on this zero interest card to have it paid off by the due date. Don't leave so much as 5 dollars on this balance if you really want to get rid of this debt for no interest.
On $7500.00 dollars over 14 months you would have to set aside approx. $535.72 if the length of time is 14 months. If you don't think you can afford this, then work out what you can afford and what you would do with the difference.
If you don't think it is possible to make a double payment or larger payment, then don't transfer your money at all. Consider contacting your current credit card company and ask them to consider lowering the interest rate.
I personally have done this before and it does work. If you can get a hold of a "real person" not a computer, and ask to speak to someone who can make that decision, you may not get zero percent but you could get the interest rate lowered enough to put you off doing a transfer.
Remember, your credit card company does not really want to lose you, so sometimes they will lower rates (as long as you have been making payments on time) to stop you from switching to another card company.
If your credit card company does not seem interested in lowering rates or helping you out, then consider these credit cards 0 balance transfer offers. Make sure the offer period is long enough for you to pay off the debt, and then make sure you pay that money each month on your card. Adjust your budget to help make this work.
Depending on how much credit card debt you have, it is most likely not worth the trouble for anything less than a year. Remember these card companies want to get you up to their normal rate quickly! So unless you have a small amount of debt, six month offers are probably not worth the trouble. An offer for a year or more at zero percent or a very low percent would be a better way to go. This would make the monthly payment smaller.
Make sure and read the agreement well, as some credit card companies will backdate the higher interest if the balance is not paid off by the end of the offer. It is up to you to remember the date the offer ends, they don't tend to send you any warning. You need to be in control of this type of financial situation.
Take control of your bills and debts by marking due dates on the calendar and make sure they are paid before those dates, and include these 0 balance transfer offers. Work it backwards, as to how much you will need to pay per month to get rid of this debt. Play the game right and you could end up the winner with a debt paid off interest free!