Sense & Centsibility Blog

Debts in the City

Three credit cards fanned outAs if the see-through plastic with its on-trend graphics weren’t enough, this beauty comes with teaser rate of 0% interest for ONE YEAR! “Are you even KIDDING ME?” you ask yourself. “Why, wouldn’t I? They can tell by my credit report that of COURSE I’ll be drooling and signing up; I have six other cards that have an average of 21% interest! I’ll just do a balance transfer and get a few things I need (read: want): that jacket, necklace, snow shovel, antique beer stein, Manolo Blahnik shoes... whatever. I can handle it. It’s only. One. Charge."

0%? Sounds great!

As George S. Patton once said, “Accept challenges so that you may feel the exhilaration of victory.” If you think walking into the mall and exiting with a purchase on a 0% card is a victory, think again.


The Reality

Here’s why that 0% card is not such a great idea: A balance transfer card woos you with an extra-low annual percentage rate (APR) between 0 percent and 5 percent. That teaser rate, however, doesn't last forever. After a set period — often a six months to a year and occasionally more — the interest rate will increase, probably to somewhere in the range of 18 to 23 percent. This could be perhaps even worse than the interest rate you were trying to get away from in the first place. Make a misstep, such as letting payments lag, and your great rate will disappear and in its place will appear the higher "go-to" rate.


How to pay off that debt faster

It’s challenging to pay down high interest credit card debt. The cycle goes on for what feels like forever. Your minimum payment barely covers the interest. A balance transfer to a 0% card only postpones the inevitable. With the help of LSS Financial Counseling, you will be well on the road to financial freedom and can be completely debt free in five years or less... and on average it's usually less.

Whether it’s for budget counseling or to set up a Debt Management Plan, you will have the tools to build a solid financial future, debt-free. Imagine the victorious exhilaration that accepting this challenge will bring! Call us today at 888-577-2227 to speak with an NFCC certified counselor and schedule your free appointment. Or click to start your free online session.

P.S. I saw a great pair of Manolo Blahniks at Savers last week… $7. No credit card needed!

Author Carla Melander is a DMP Specialist with LSS Financial Counseling.