Credit cards are being used to both consolidate and erase various personal debts, even some debts associated with other credit cards, but simply because more low rate cards that offer these balance transfer options are becoming more available does not necessarily mean that consumers are going to benefit from consolidating debt in this way. Before consumers enter into a new credit card agreement which will allow them to transfer balances onto a new card at a low rate, advisors are suggesting that these men and women consider the pros and cons of a balance transfer rate, future interest rates, and essentially how a new credit card might affect their life.
Reports have been stating that financial institutions are looking to attract more consumers back into the credit card business as there are, by and large, more consumers who may be able to handle credit at the present time or who could benefit from using a balance transfer card to consolidate debt. Obviously, one of the main draws of these new credit card offers are not only the low interest rates, but also, the option to consolidate debts or new card and potentially erase it at a low rate which will lower the overall amount one must pay.
Yet, resources like Cardhub.com make mention of the fact that many of these cards can offer a low interest rate or even 0% interest on a balance transfer, but there are is usually a fee that will be charged in relation to the amount a consumer is transferring to a particular card. Also, consumers are being cautioned to look out for what interest rate may be offered on a particular card after the introductory period has expired, as this could create problems for consumers in the future if debt remains on their card of if a high rate comes into effect.
However, there are those who feel that new offers for balance transfer options that come with an affordable interest rate can be beneficial for those who may not be able to erase their credit card or other personal debts in an affordable manner due to current interest rates they may have. It must also be understood, consumers who may opt for a balance transfer credit card opportunity must look at their financial situation to determine whether they can erase this consolidated debt before their introductory rate increases.
Also, some cardholders have made the mistake of transferring balances of multiple cards onto one low interest balance transfer credit card and then continue using other cards to make more purchases, which can be the cause of future financial distress as consolidating debt on a balance transfer card doesn’t really erase these other debts. For the majority of consumers this is understood, but consumers must be wary of falling back into old spending habits if they have gotten into a situation where consolidating debt is necessary so that they can affordably erase what they know on multiple obligations. While, again, these balance transfer cards and low interest rates are currently being advertised by a bevy of financial institutions, consumers must look at not only fees associated with these cards, the future interest rate they will receive once the introductory period has expired, but also, cardholders need to be sure they can erase their debt in a timely manner, without acquiring other sources of debt, before a higher interest rate kicks in and causes overall costs to rise.