The Pros and Cons of 0% Balance Transfers

If it’s too good to be true, perhaps it is.  0% balance transfers are a popular feature on credit cards, especially as part of introductory rates. People use them when they get new credit cards, because their old ones have rates that are too high and are crippling them financially. Typically, new credit cards will have a lower rate than the one that you are paying, at least for the first six months.  This is just “to lure you”

More credit card providers will get you to use their new cards instead of the old one. They use o balance transfers as an incentive to get you to switch your old balance to their card at 0% apr for you. This is, definitely,  a good deal for you - if it really,  is a low apr card.

Sounds great so far?  Now, here’s the downside:

It can be too good a deal, but this can get you into more and deeper debts, until you cannot get any new credit cards with 0% balance transfers and low apr. anymore.   As a result, you'll have to start paying a high rate for your credit card, instead of the low rate you've been paying, and also pay lots of money to transfer your balance.  

This happened to me once.  I had lost my job while paying for my house, and was trying to make both ends meet with a low end service industry job. Normally, it would have been enough to live on, but with my mortgage payments, I was racking up debt.  And I was like most anyone else – instead of scrimping to save, and finding other jobs to augment my low-paying one, I used low apr cards with 0% balance transfers to cover my high interest rate debt, instead.  This was a good idea for the first few months, but soon I began racking up debt faster than I would have thought possible.

When my six month low apr card offers from my credit cards ran out, I tried to get new 0% balance transfer cards to move my debt around, only to find out that no one was interested anymore to offer me,  even just one. They didn't even come in the mail! I was falling very quickly into heavy debt. Fortunately, I found a new job in an ad agency, and quickly began to make an income similar to what I had been making before, but the damage had already been done. Six years later, I am only just emerging from debt that I accrued during that period. A 0% balance transfer credit card can be very useful, but it is no substitute for responsible spending!  In the future, I definitely will be more careful.