It’s so tempting. You’ve got a new credit card, so why not use it even for a big-ticket item like buying a car? After all, it’s supposed to be a no-interest card.
Well, the truth is that so-called zero-interest credit card balance transfer offers must be scrutinized carefully. Debtors in the San Antonio or anywhere else in the U.S. can only add to their problems with debt if they don’t read the fine print on those offers.
Keep in mind, too, that if credit card debt becomes unmanageable, bankruptcy may be a good way to obtain meaningful debt relief. Whether you use Chapter 7, Chapter 13 or even some other form of bankruptcy filing depends on your individual circumstances. But it is worth knowing that credit card debt is one of the types of debt that bankruptcy can help you tackle.
So what about those zero-balance transfer offers for credit cards? Some people say that if a card issuer lets you transfer a car loan to a no-interest credit card, you can save substantially on interest payments. You will also essentially be trading secured debt (a loan with the vehicle as collateral) for unsecured credit card debt.
This strategy, if successful, would also give you title to the vehicle sooner. And that could help you keep the car from being repossessed if you run into challenges with making your car payments.
The problem, however, is that it is very easy to fail to pay off the credit card before the zero-interest period expires. The zero-interest period usually only lasts a year. Even if the no-interest period lasts 18 months, the date at which interest will kick in can sneak up on consumers.
And if you are one of those consumers and have failed to pay off the balance, you’ll be hit with double-digit interest on that balance.
Source: “The Risks of Transferring a Car Loan to a Credit Card,” The New York Times, Ann Carrns, 3-18-13
To learn more about our practice, please visit our page on consumer bankruptcy.