In today’s world of ‘spending on credit’, many people can find themselves at a point where they have so much debt and such large interest repayments, that they can’t even imagine a way out. With credit card interest rates the way they are, its very easy to be paying hundreds of dollars a month on interest alone!
Now some of you may have heard of credit card balance transfers as a way to help with this, or in particular the offers that come with these transfers. A balance transfer is the mechanism by which you can move the amount owing on one credit card to another. The offers that come with these are generally such things as a very low interest rate on the balanced moved, for a period of time (usually 6 or 12 months). As such, if you have a very large balance on your credit card you can move this from a large interest rate on one card (for example 25%) to a low interest rate on another, something on the order of 5%, or even 0% on some offers!
Now these offers are really a great idea for someone who is trying to reduce the amount of debt that they have, as while paying off the same amount each month more of it is going to the actual debt than was before (because less interest has to be payed!). However, you must be careful when doing this as there are some very common pitfalls which must be watched out for!
(See these after the jump)