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The following is a guest post written by Colin Robertson from Credit Card Balance Transfer Offers, a blog focused on the money-saving and debt-destroying aspects of balance transfers. Enjoy!
It Starts Off Small
I Ignored the Offers
Then, I Beat the Credit Card Issuers
How about you all? Have you ever used 0% balance transfer deals to reduce your credit card debt? If so, how did the process shake out? Were there any hidden fees?
If not, what has kept you away from using them? If you’ve never had credit card debt, would you use balance transfers?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
First off, great post Colin! I really enjoy these first-hand experience posts about debt reduction. It puts a very human feel to reading a blog, and I like that!
- @ Spending excessively in your first job out of college –
- Colin brings up a very prevalent issue that I have seen all-too-often with highly educated early 20’s graduates with whom I was acquainted at my old job.
- It’s definitely understandable how it would happen: you go to college for 4 years busting your tail to get your engineering degree (or equivalent). You’re most likely strapped for cash and having to cut as many corners as you can on your apartment, meals, car, etc.
- Then, SHA-BAM!! You land an engineering job where right out of college you are earning $60,000 – $80,000 per year. You have no children and no family to take care of. You’re living the high life, and the money is plentiful! Sure, maybe you have accumulated some student debt in your undergraduate days, but the interest rate for that is low, and you have no trouble affording it!
- Because of your new-found healthy cash-flow situation, it’s easy to be tempted to start taking out loans to buy furniture, cars, $10,000 wedding rings, or even a new house.
- However, by simply attempting to maintain some of the same lifestyle you had in your college days, you can really save a lot of money and get ahead in life.
- In my first job out of college, I was able to save about 60% of the money I made. This really enabled me to get ahead, especially since the money was being invested during the recession of 2008-early 2009.
- @ Key to reducing credit card debt = changing your habits –
- I couldn’t agree more with Colin’s point about it being crucial that he not only 1) get the balance transfer to enable him to get ahead on his payments, but 2) that he also make sure to change the habits that landed him with credit card debt in the first place.
- Even with the most favorable 0% balance transfer terms, you’re not going to be able to pay off your debt if you keep on spending excessively.
- @ Using balance transfers to get rid of credit card debt –
- First, I want to add one word of caution for anyone thinking of using a balance transfer. Please make sure to watch for hidden fees. In other words, do what Colin did here and read the fine print! This will ensure that no surprises come your way as you commit to a balance transfer deal.
- Second, I am still trying to decide if I would recommend using balance transfers or not when people are paying down credit card debt. Indeed, there seems to be a split in the advice of personal finance experts on this topic as well.
- On one hand, I cannot argue that using a balance transfer will allow you to pay less interest in the short term. However, in the long run, after the 0% promo deal is up, what will the interest rate be? Will it revert to being 20%? 30%? Will the whole ordeal of finding a 0% balance transfer deal just take away the person’s focus of saving and paying off their debt?
- Because of these reservations I have, in my Helping a Friend Get Out of Credit Card Debt Series, I currently just recommended that my friend focus on 1) calling their credit cards to lower their interest rates and then 2) creating their Debt Free Action Payoff Plan.
***Photo courtesy of http://www.flickr.com/photos/alancleaver/4105755730/lightbox/