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Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: Balance Transfers - A Silver Bullet?||Date: 7/18/2003 10:22 PM|
|Author: DizChick||Number: 165402 of 311495|
The problems with balance transfers:
-Some people detailing their problems won't qualify for a new card to transfer to.
-If someone has charges on every card there isn't a place to transfer to when the can't open a new account.
-There can be a tendancy to think that this is "paying off" the debt, when it is only moving the debt to another lender at (hopefully!) a lower rate.
-If someone does transfer, they may now see the empty card(s) as available money if the spending issues (if any) aren't addressed. (I do realize that not everyone got into debt by over-consuming.)
However, balance transfers can be a great way to manage interest rates during debt paydown as long as the above issues are addressed. It can also be a good way to show the CC company that you have options, and put you more in control. (I recently called a CC to say that I would BT the balance away once my low BT rate with them expired. In response they dropped my normal rate by a full 4%.)
I do see the use in balance transfers as a debt payment tool, but maybe we shouldn't suggest them as the first option to a newbie. (Were BT's suggested this frequently before the teaser rates came down to 0-4.99%? Maybe the current low rates are encouraging this as an earlier suggestion.)
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