Credit Card Versus Bankruptcy Is It OK?
Chances are that you have received an offer to transfer your credit card balance to a new card. If you're already buried in credit card debt, is using a balance transfer the best strategy to relieve your financial problems? How does bankruptcy play into this?
The idea behind a credit card balance transfer is to find a lower interest rate so you can save money. This is certainly worth considering, but a transfer of this nature may not solve your problems. Keep in mind that a credit card in general and the balance transfer in particular still constitute a loan. You're simply trading one loan for another and will continue to have to pay significant interest.
There are even some credit cards which give you a 0% APR for a few months before increasing the interest rate significantly. You should be aware of this, and you should be careful to read the fine print before you make any decision. You may be able to avoid accumulating further interest for a few months, but then the interest rate can change and be even higher than before.
The real danger is that you will see the credit card transfer as a license to continue charging and spending more than you earn. Choosing a lower interest rate, especially a 0% APR, can provide some short-term relief and allows you to make higher monthly payments to gradually eliminate your debt.
Just remember that charging beyond your means is probably what is getting you in trouble to begin with, and whatever strategy you choose should move you towards the ultimate goal of eliminating your debt. If you can't see yourself paying off your credit cards over the next few years while maintaining a reasonable standard of living, you might need more serious help like bankruptcy.
The creditors might disagree, but keep in mind that they have their own interests at heart. The longer they can extract money from you the better, and the more interest they can charge you the better as far as they're concerned.
The idea behind a credit card balance transfer is to find a lower interest rate so you can save money. This is certainly worth considering, but a transfer of this nature may not solve your problems. Keep in mind that a credit card in general and the balance transfer in particular still constitute a loan. You're simply trading one loan for another and will continue to have to pay significant interest.
There are even some credit cards which give you a 0% APR for a few months before increasing the interest rate significantly. You should be aware of this, and you should be careful to read the fine print before you make any decision. You may be able to avoid accumulating further interest for a few months, but then the interest rate can change and be even higher than before.
The real danger is that you will see the credit card transfer as a license to continue charging and spending more than you earn. Choosing a lower interest rate, especially a 0% APR, can provide some short-term relief and allows you to make higher monthly payments to gradually eliminate your debt.
Just remember that charging beyond your means is probably what is getting you in trouble to begin with, and whatever strategy you choose should move you towards the ultimate goal of eliminating your debt. If you can't see yourself paying off your credit cards over the next few years while maintaining a reasonable standard of living, you might need more serious help like bankruptcy.
The creditors might disagree, but keep in mind that they have their own interests at heart. The longer they can extract money from you the better, and the more interest they can charge you the better as far as they're concerned.