Do you see your debt as a grizzly bear up on its hind legs with claws flashing waiting to tear you to pieces? Or maybe you see it as an octopus wrapping its tentacles around you and trying to drag you down into the bottomless depths. If you do see your debt as some kind of monster, you may be thinking about one of those zero balance transfer offers for debt consolidation and wondering if this could help you. While there are other options like refinancing your debts or credit counseling, balance transfers certainly deserve your attention.
The good and bad news
The good news is that there are a number of credit card companies now offering zero balance transfers. If you’re not sure what this is, it’s not a credit card with a balance of zero. Instead, it’s where you transfer all your credit card debt to a new credit card that has an interest rate of zero for some period of time.
A zero balance transfer will provide debt relief but only short term. In some cases, the company making the zero interest offer will give you 18 months or more before it begins charging you interest. Let’s suppose that you have credit card debt of $5000 at a 5% interest rate. If you transfer this to a new card that has zero interest for 18 months, you would save $700. You could then use this money to reduce your credit card debt.
Read the offer carefully
As people in the advertising agency business like to say, “the big print giveth and the small print taketh away”. This is a shorthand way of saying that before you accept any offer for a zero balance transfer; make sure to read it carefully–including the fine print. You might find that the zero interest rate lasts for just 6 months and not a full 18. You could also find that the offer is good only for people with a credit score of 800 or better. In some cases, you won’t actually know for how many months you’ll have zero interest until you submit an application and the credit card company reviews it. If they advertise six months of zero interest you should get at least six months. However, whether you get more than six months or not will be determined by the credit card company and will be based largely on your credit score.
What happens next
It’s also important to know what will happen at the end of the 6 or 18 months of zero interest. For example, one credit card company recently advertised a zero percent introductory APR on balance transfers for 15 months. However, a variable rate APR then kicks in at 10.99% to 20.99% based on your creditworthiness. This means you won’t know what your APR will be until the credit company tells you what it is. And it could be a shocker.
A better alternative
As you can see, the big disadvantage of a zero balance transfer is that you could end up with an outrageously high interest rate. In comparison, there is an alternative called debt relief or debt settlement. Most people are not aware of this but, given the proper incentive, the credit card companies will agree to reduce both your debt and your interest rates.
This is not something you should try yourself. The credit card companies are very skilled at these kinds of negotiations and you probably aren’t. Many families have done the smart thing and hired a third party company to do the negotiating for them. For example, the company National Debt Relief has helped many Americans get debt relief. In many cases National Debt Relief has been able to get credit card debt reduced by 50 percent or more and help their customers become credit card debt free in from 24 to 48 months–depending on how much is owed.
You can get more information on debt relief at https://www.nationaldebtrelief.com. Since the company charges no upfront fees it will cost you absolutely zero to learn what it could do for you. And that zero could end up being better than zero interest.