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Can A Balance Transfer Reduce Your Credit Card Debt?


Some credit card spending behaviors get a universally bad rap, such as taking cash advances from a credit card or using it to purchase groceries.  Other credit card maneuvers, like choosing credit cards over cash in order to get reward points, have their partisans, even though others find them wasteful.  If you ask five of your friends whether you should transfer the balance of one of your credit cards to another, it is unlikely that they will all agree as to whether it is a good idea.  In some situations, a credit card balance transfer can save you a substantial amount of interest over a long period of time, but in others, the effort required to accomplish a balance transfer does not translate into major savings, and sometimes balance transfers can even increase your debt burden.  To find out more about credit card balance transfers and the alternatives to them, contact a Miami debt lawyer.

A Credit Card Balance Transfer Can Save You Money If You Do It Strategically

A credit card balance transfer is, as it sounds, when you open a new credit card account and close an old one, transferring the balance of the old credit card onto the new one.  Most people do this when they find a credit card with a lower interest rate than their previous one.  Some credit cards even offer promotions where there is a zero percent interest rate on the new card for a certain period of time, such as for the first year.  Therefore, you can save money by transferring your balance, as long as you make your payments on time, and especially if you pay more than the minimum payment each month.

Ways That a Balance Transfer Can Backfire

Given that transferring a credit card balance takes several months, and given that you sometimes have to pay a fee to transfer the balance, a better strategy might just be to pay down the balance on your current credit card as quickly as you can.  Opening a new credit card account temporarily lowers your credit score, so you can improve your credit score more quickly just by making bigger payments on your existing credit card debt.

If you make a mistake with your new credit card, you could end up with even bigger debt problems than before.  For example, if you miss a payment during the zero percent APR period, the zero percent APR will terminate automatically, which defeats the purpose of a balance transfer.  In many cases, getting a debt consolidation loan is less risky than doing a credit card balance transfer.  Filing for bankruptcy protection could also be an alternative to transferring your credit card balance.

Contact a South Florida Debt Lawyer About Finding Lasting Solutions to Your Debt Problems

A South Florida debt lawyer can help you find solutions to your debt problems that are more definitive than simply transferring a balance to a different credit card.  Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.



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