Balance Transfers, Interest Reduction, Get Help Today

Getting interest rates down will speed up the repayment process and get you out of debt earlier. After about 6 months of consistently declining balances, credit card companies will start sending you letters offering low rates on balance transfers. Unfortunately, they're not doing this out of the goodness of their hearts and they're not rewarding you for getting your finances under control. In reality, by reducing your balances, their profits from you are dropping. In order to drive your balance back up, they offer you a short-term reduction in interest rates if you transfer a balance from another card.

Read the fine print carefully! Many will offer you 9% or 7% (or even 0%) but only on the transferred amount, and only for 6 months. The existing balance you have is still being dinged at the previous rate, and, when the special rate period ends, the amount remaining on the transferred balance shoots up to the full rate too. Money that you pay them will go first to the transferred balance since they're not making any money on it during the special offer period. Your existing balance remains unpaid. And you're paying the full interest on it. They're doing it to maximize the amount of interest they can extract out of you.

That's not to say that these special transfer offers are all bad. Don't hesitate to negotiate with the creditor, ask them to scrap the special rate period, and offer a permanent lower rate, either on the transferred balance, or the whole debt. These are offers that you want to consider taking. Be careful, though, to pick and choose the offers you take. Again, read the fine print and run the numbers through the different options available to you. Also, don't keep switching from one card to another too frequently. That actually shows up on your credit reports and can damage your credit rating.