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» How to Properly use No Fee Balance Transfers

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Looking to maximize no fee balance transfers? Let’s review how you can properly use zero percent credit cards in connection with a debt repayment plan, or even as a way to make some extra money.

Be forewarned of the dangers of zero percent interest rate credit card balance transfers.

A reader wrote this to me recently “Back in 2001 I had about $3,000 in credit card debt. Around that time decided it was time to quit spending more than I was earning and pay off the debt completely. I had wised up. Specifically, I realized I was paying a bunch of money in interest by keeping that balance AND that extra outflow was keeping me from achieving other goals.

So, I came up with a plan to pay it off. It was a simple plan that included throwing any extra money left over each month at the debt. I decided a piece of the plan would be to used a zero percent credit card to help:

  • lower the amount of interest I was paying while I paid it off,
  • and motivate me to pay it off quicker (by the end of the term).

It worked. It took me about 6 months to pay it all off.

I’ve also used zero percent interest rate deals in other instances. I may go into these more in a later post, but I actually used a zero percent credit promotion when I got Lasik surgery and a zero percent credit card when I paid for some wedding costs. In both instances I never paid a dime in interest, I racked up a bunch of credit card rewards, and never had to tap into my short-term savings.” Well this is wonderful back in 2001, but lets deal with reality this is 2012, where the world is a different place, credit cards are different and financial and economic times are way different.

Why Use a Zero Percent Balance Transfer Credit Card?

There are a couple of good reasons to consider using zero percent balance transfer credit cards:

Paying Down Debt – The first and obvious reason is to help you pay off debt. While the transfer itself isn’t going to pay off your debt, making the transfer will mean you are paying less in interest payments while you pay down your debts. Make sense?

You might currently find yourself in a bunch of credit card debt. Not the end of the world. But maybe you’ve built up a balance over the years and you’ve just been paying the minimums. This is the best reason to use the zero percent balance transfer credit cards, in my opinion.

The above word of warning was not meant to discourage people who are in dire straights from using these cards. I realize people often turn to these cards when they are experiencing a temporary financial set back, like a job loss or injury. By all means use these cards to help float you over that down period. Just remember to be aware of the dangers.

There are lots of reasons that you can think of to try to use a balance transfer, but in the long run, unless you can consolidate debt and reduce your payments so that you can pay more towards the principle, just don’t do it, don’t play with fire.

Be a smart consumer and don’t walk into a problem.

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