When your credit card balances start to get high, they can be a source of stress. You may worry about your ability to pay the minimum amount due each month and have to pay over-limit fees on top of interest.
It may be even more stressful to have a high balance if you need to use your credit card to cover the basic living expenses, like groceries for your family. When your budget has very little wiggle room, a balance transfer may seem like a great solution given your credit card debt.
However, a balance transfer might actually lead to worse debt problems in the long run.
Balance transfers just move the debt from one card to another
When you transfer a credit card balance, it may free up available credit on one account while also allowing you to pay a lower interest rate on the balance that you transferred. However, there are often strings attached to that transfer.
You may have to pay a flat fee that is a percentage of the amount that you transfer. You may also be subject to promotional interest rates. While the interest rate is low at first, it will go up later. You may have to pay that higher interest rate going back to the date of the transfer if you don’t pay the full amount off during the promotional period.
Credit card balance transfers are a way for people to get further in debt, not out of that. Bankruptcy, on the other hand, can eliminate the need to pay those balances back. Exploring bankruptcy as a solution for credit card debt can help you regain control over your finances.