The following is a guest post from Joshua Rodriguez. Thanks Joshua!
Hey everyone, I’m Joshua Rodriguez and today, I write my first article for My Canuck Buck. Today, I’m going to talk a bit about an option that most of us know we’ve got. However, misguided use of this option leads many consumers further into debt and poor credit scores. The option is, balance transfer credit cards. Now, I want to make very clear that I completely condone the proper use of this option by consumers whom have done their research to ensure it was the best option for them. So, in this article, I will discuss who is and who isn’t a candidate for balance transfer credit cards and how making the decision to use them in improper ways can harm your financial stability.
If You’re Considering Balance Transfer Credit Cards As A Debt Relief Option…
Let’s face it, the last several years of tough economic times have left tons of consumers plunged in debt. If you are one of those people, you’ve probably done your share of online research and thought of a few different options. That being said, there are plenty of options for those who truly need debt relief; however, balance transfer credit cards are most likely not the best option.
Why Shouldn’t I Use Balance Transfer Credit Cards?
Chances are, you were driven to balance transfer credit cards because they provide low promotional interest rates and ways to consolidate multiple debts. In which case, you could say that you are doing a do it yourself debt consolidation of sorts. But, in reality, it isn’t all that simple. When making decisions like this, it’s important to take into account the long term reactions of your decisions. Using balance transfer credit cards as an example, although low promotional interest rates look great now, they will eventually expire. At which point, you will be required to pay the standard interest rate for the account. So, in 6 months to 1 year, the average promotional period, you will find yourself in the same position that you’re in today or, possibly worse!
What Can I Do?
As I stated above, there are several options out there for consumers that are facing financial hardships. I always suggest calling your lender first and informing them of your hardship, you’d be surprised at what some lenders are willing to do to help. You may also find that you have the income you need but, your budgeting habits lack. In that case, I would suggest making and maintaining an accurate budget spreadsheet. In more extreme cases, you could consider debt consolidation or debt settlement. All of these debt relief options are just the tip of the ice burg. The best part is, there is no good or bad option, the key is choosing the one that fits your personal financial position best!
If You’re Considering Balance Transfer Credit Cards For Interest Rate Reductions…
You might be on the right track! Balance transfer credit cards were designed as a way for consumers with good credit scores to reward themselves with lower rates. That is of course, if the consumers have given the current lender an opportunity to keep their business (In a perfect world). Before considering balance transfer credit cards as a way to reduce your interest rates, you should think about the relationship that you’ve built with your lender. Is it good? Do you love the card you use? Well, your lender most likely loves you just as much as you love them and in many cases, may be willing to reduce your interest rate with nothing more than a phone call. However, if you’ve called and they are not willing to meet your expectations, balance transfer credit cards may just be your best option for interest rate reduction.
Balance transfer credit cards are a great financial tool and, have been used by several people to build financial stability. However, it’s important to remember that there is no financial option in any class of finances that is designed for everyone. There are ups and downs to any decision that you will make. The key is thinking about the long run to make more financially sound decisions.
Cat’s note: Joshua raises some good points here. I’ve also done a post on credit card balance transfers and one on how to negotiate with credit card companies.
About The Author – Joshua Rodriguez
This article was written by Joshua Rodriguez, proud owner and founder of CNA Finance and avid personal finance journalist. Join the conversation with Joshua on Google+!