When to Avoid Balance Transfers – Even If it is Zero Interest

By Leni Parrish on August 5, 2009

Balance transfers with zero interest are good alternative to get away from current high interest cards. You can surely save substantial amount from the interest when there is another provider offering to take out interest. This usually applies under limited period and condition but it surely benefits you if you know how to play by the rules.

Although balance transfers can put you in a better position, it is not suitable for everyone. If you are in any of the following scenarios or conditions, you should avoid accepting or applying the offer no matter how attractive and enticing it is.

  • You can not pay off the balances within the specified period.
    • Offers of balance transfer are only applicable within specific periods. It could just be an introductory deal or a seasonal promo to entice more customers. In any way, the attractive offer could end up within a month or up to a year at most, depending on the issuer’s prerogative. Within this period, you should be able to pay off the balances. If you think you cannot do so, then better drop the offer. You might end up paying higher interest plus charges for missing payments.
  • You are planning to make a loan in the future.
    • Additional loans may mean more debts to pay. If you are planning for a new loan in the future, better deal with your current debt with your card first so you can handle the new loan. Also, getting a balance transfer will only hurt your credit score even more and low credit scores means less privileges from credit companies.
  • You have a low credit limit.
    • Ideally, the balance that you transfer to a new card should be less than your credit limit. This way, you will still make purchases with your card. But if you are qualified for only a low credit limit, do not trouble yourself further. The credit limit might only consume a portion of your old card’s balances. You can end up having two debts from different cards.
  • You have cases of bounced checks and late payments.
    • These are obvious signs that you are having a hard time with your finances. Adding a balance transfer plan may further ruin your ability to handle debts. Even if you think you can save with a zero transfer offer, you might miss payment and such risks are simply too dangerous to take.

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