Credit Card Debt Management

Zero APR offers can be awfully enticing, especially when you’re staring at a frighteningly high APR on your current card. But really think this through before you jump at the offer. There are some pros and cons to consider:

PROS

1) It allows you to pay off your debt faster. Transfer your old debt to the new card, and without throwing all that money at interest, you can pay more toward principal. However, make sure you have a workable plan beforehand to get out of debt, and more importantly, that you stick to the plan!

2) It frees up money to go elsewhere. True, but the wisest use of a zero APR card is to put the extra money toward your credit card’s principal balance and get the thing paid off.

3) It’s a chance for a fresh start. You swear you’re going to do it right this time. Well, it’s going to take an enormous amount of self-discipline and you will need to change your prior spending habits. This new card may offer cashback rewards or frequent flyer miles or some other perk, but don’t go use that as an excuse to go overboard on the spending!

CONS

1) After the introductory period (typically 3 months or more), the interest rate can be relatively high. If possible, you’re probably better off going with a low-APR card. Either way, make sure to pay your bill on time so your interest rate won’t jump up to a high default rate.

2) Having too many open credit cards can hurt your credit score, especially when the cards are newly opened.

Credit card companies are experts in marketing. They will throw in all kinds of perks and gimmicks to draw in applications. So next time you’re staring at an enticing credit card offer, remember to think before you leap.