The advantages of a 0% balance transfer

Everyone needs a little bit of help from time to time when it comes to money. Think about it. Don’t you remember a time in your life when you needed to borrow a few dollars or asked for an extension on a debt you owed? Of course you can. Much like those times, a 0% balance transfer on a new credit card can be very helpful to you. First, you get to transfer the money (or, at least, a portion of the money) on a high-interest credit card onto a credit card that will hold an introductory 0% rate. Plus, with a 0% balance transfer, you won’t pay anything for making the transfer. This allows you to simply make the minimum payment every month on the card without accruing any additional fees or costs, provided you make your payments on time. It will also decrease the costs on your other card because the interest rate will be applied to a lesser amount. In these ways, a 0% balance transfer can greatly help out your credit situation.

But there are some disadvantages, too!

Many Americans get intrigued and then fooled by 0% balance transfers. Essentially, credit card companies are handing you a free line of credit for a certain number of months. However, this causes many people to simply make the minimum payments and forget about the balance. Companies are banking on this and will take the risk that you won’t pay off the credit card fully. As soon as the introductory period is over, you’ll start getting hit with normal interest rates and be forced to make payments on two credit cards now. It certainly is not the end of the world but you should have a plan before applying for a 0% balance transfer on a new credit card. Think about how you’re going to attack your debt and then do it!

How to decide whether you need a 0% balance transfer

Before you even think about applying for a 0% balance transfer, think about how it will help you—and how it could hurt you. Are you prepared to do everything you can to make payments on the new card and eliminate the debt before the introductory period ends? Are you prepared to make the transfer and then make payments on your other card or cards? Can you avoid racking up new debts on the old cards? If you can answer “yes” to all of these questions, then a 0% balance transfer could help you and your credit situation immensely. But before you apply, do your research and decide how you’re going to attack your debt.

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