Telling reporters that many people have gotten “trapped” because of the economic downturn that has turned family budgets on their heads, President Obama recently signed into law new rules to regulate the practices of credit card companies.
Consumers will now have to receive 45 days' notice and an explanation before their interest rates increase. Obama went on to criticize confusing fine print; unannounced shifts in interest rates even when payments aren't late; and payments directed to balances with the lowest interest rates rather than the highest.
Clearly, in the past few years it has been far too easy for the average consumer to build up a mound of credit card debt and then have extreme difficulty digging out from underneath.
Now, more than ever, the best thing many people can do to immediately lift the burden of too much credit card debt is to transfer their credit card balance to a card with 0% APR.
By transferring the balance of your debt from your current credit card to a new interest-free card, you can give yourself time (usually anywhere from 6 months to a year) where no interest is added to your principle. This allows all the money you make in payments each month to be poured directly into paying down your balance, shrinking the amount you owe much faster. This can greatly benefit your credit score and credit-to-debt ratio, both of which can make you much more attractive to lenders.
There are some things to consider before transferring your balance to a new card:
- 1. Always take into account the length of the 0% APR period.
- 2. Be sure you are able to pay off your balance within this introductory period, otherwise high interest rates often kick in when the period ends.
- 3. Make a payment schedule and set aside money each month to pay towards your balance.
- 4. Also, be aware of transfer fees that may be charged by the credit card companies. These can come as unexpected surprises and throw off the payment plan you have created.
Another factor to consider is whether or not the 0% APR offer applied to purchases as well as payments. If interest is charged for your purchases on the transfer card, this can leave you with lingering debt even after your principle is paid off. If interest is charged for your purchases try and limit use of the card to emergencies only to avoid this occurrence. Also, be sure and compare the rewards programs offered by a card, as these will be available to you once you have paid off your balance. Pick a card that rewards you the way you want in the future.
A 0% Balance Transfer can be a great way to get out from under a seemingly insurmountable pile of debt and greatly improve your credit score and spending power at the same time.
With Congress and the White House cracking down on bad practices of credit card companies – now may be the time for you to take advantage of this clever money saving tactic.
Click on the links below for some great 0% APR credit card offers: