Debt Advice: Why Balance Transfers Won’t Help

March 20, 2008 By Tisha (Kulak) Tolar

It is easier than ever to get credit these days and that is not a good thing. The credit card companies, like Visa,  used to promote their products to people who were able to pay off their bill each month without concern. However, companies now reap more rewards from those customers who can not make a full payment each month, and continue to rack up additional balances, late fees, and over the limit charges.

For people already facing debt crisis, it may seem like an ideal situation to transfer one credit card balance to another card. It appears to be a simple solution and an easy way to “pay off” your credit cards and allow you more room for additional purchases. Credit card offers come into your mailbox every day with attractively low interest rates on balance transfers. Take some good debt advice, While consolidating several small balances into one single payment may make sense, transferring large balances to card after card does not, especially if you continue to use the card for new charges.

If you transfer balances from one card to another and actually can make a large payment each month to pay down the balance during the low interest period, then this might be a reasonable choice. However, if you transfer the balances with no intention or way of making a large payment every month, it will only create further financial disaster. Instead, consider finding part time employment and commit to having all of your earnings go toward your credit card debt until it is paid off.  If a second job is not possible, review your budget and devote time everyday to cutting expenses where you can. The money saved should be put immediately towards your credit card so it is not spent elsewhere.

If you are interested in consolidating multiple credit cards onto one low-interest card with debt consolidation, do your homework and find a card that is right for your situation. Do not just accept any offer that comes in mail. Explore different cards, different incentive programs and read the fine print for each card you are interested in. There are plenty of credit card offers that will benefit your situation if you chose wisely and refrain from making new charging on your credit cards. Make sure you understand the amount of debt you are transferring and estimate how much your monthly payment will be. Once the balances are transferred, stop using your credit cards. Set aside money within your budget to save for things you need and stop purchasing things on credit you can’t afford.

Setting specific goals for yourself, such as paying off a credit card balance, will allow you to focus and help you to better understand what is necessary to reach that important financial goal and prepare you to work only with the cash you have on hand.

Posted in budgeting, credit cards, debt, financial problems, personal finance basics, saving money

• Credit Cards Turn To Behavioral Analysis To Manage Risk Credit card companies are looking for new ways to manage consumers' risk of defaulting on balances.  Apparently, they now plan to review cardholders' spending patterns, including which merchants they frequent, to determine build their risk...
• Joe the Plumber If your home, apartment or some other building is suddenly experiencing a water leak, then repairing the fixtures, the faucets and the pipes can become extremely urgent in no time at all. You may be...
• How to Handle Working Full-Time and Part-Time at the Same Time! Today, Mrs. Micah was kind enough to do a guest post for me as I'm tackling three finals today. I think it's a great post and if you enjoy it, please visit her site and...
• Smart Money Has A New Guide To Credit Card Reward Programs. Just put up on their site today, Smart Money has a guide to the good, the bad and the ugly world of credit card reward programs. They used Citibank's Thank You Network, Bank of America's...
• Getting Out of Credit Card Debt; You Can Do It! Credit card debt can cause massive stress. Imagine a life without credit card debt. Can you see it? If you’re like many average families, you may have a hard time getting a clear picture. Many...