Long Term Solutions

Substitution as a Solution

Many credit card companies are touting the 0 balance transfer as a viable way out of credit card problems. Essentially, the situation is painted with a hapless debtor unable to cope with the high interest rates on the card loan payments. Suddenly, that luxury purchase begins to slowly gnaw on your finances.Piles upon piles of unpaid bills encased in red envelopes dot your desk as if they were calling out to you to pay them. Phone calls from collection companies and worse, repossession companies are becoming a daily occurrence. You’ve even decided to hang the phone line during the time that they’re most likely to call.Then you get this offer. All you have to do is to get a new credit card application from another credit card company so that you can avail of a 0 balance transfer. This proposition is controversial to say the least. Essentially, you are transferring your debt from one company to the other. Obviously, these are for-profit-companies that see a potential revenue source from your problems.In the short term, you may breathe a sigh of relief and take advantage of the low interest rates and other promotional offers. Most of the time, these companies give you a 6 to 24 month breather when you can enjoy a worry free existence. It may be a band aid solution, but at least it’s a solution. What you should do is to use the time that the new company bought for you to come up with long term solutions.So, there you’ve done it, you’ve successfully filled out that new credit card application and managed to avail of the 0 balance transfer . Now what? If you really, really want to get out of credit card debt, then try as much as you can to take note of these pointers. It’s going to be painful, but the freedom that it will give you later on will be refreshing.Enforce martial law on your finances. Everything that isn’t necessary for you to live, breathe, drink and survive should not be purchased. It may sound a little bit obvious but surprisingly, many people disregard the advice on frugal living. It’s going to be hard, specially if you are not just keeping up with the Jones’ but living more extravagantly than them. The proposition is best approached in minute steps. Take it one step at a time. Instead of buying soda, just drink water. Instead of grabbing a cheeseburger, just make your own sandwich. The 0 balance transfer bought you time and that’s about it. Be sure to prepare for the coming financial onslaught when the promo period ends.Pay off your credit card bills and save money for later. Many people think that the financial relief is permanent. It’s time to knock some sense out of everyone who thinks otherwise. These bills will stick on your name as hard as superglue and the only way you can get rid off them, is by paying them off.Try not to buy something new until all your debts are paid. In a world with no debt. People usually save up money until they can buy the thing that they want. Credit cards are an artificial way of acquiring things. It gives people the chance to buy something that they have not saved for – at an interest. Again, in real life, once you save up and bought that thing that you want, you can only buy again after you’ve saved money for it. This means that you can still keep your credit card and do all of this, but you’d have to apply the principle as if you were saving up some money.Do the math. Surprisingly, very few people actually take the time to read the fine print when they sign that credit card application . All they’ll see is the big letters containing the 0 balance transfer rate, which is very low or even non-existent. What you need to do is to read the things that make you cringe, such as the rates after the promotional period. The APR usually runs from 10.98% to 20.99% and may even contain a balance transfer fee that ranges from 3% to 4%.The consumerist attitude could be ameliorated by an alternative approach to buying. Rather than purchasing high end luxury items that cost a lot in credit, it would be better to save on expenses by buying alternatives. Substitution could offset a lot of expenses and channel them to loan repayments. By the time that the 0 balance transfer promotional period has lapsed, you’d then be equipped to deal with the higher rates.Of course, it’s also possible to do away with the new credit card application altogether. The question that remains is whether you are financially capable at the present to repay the debt given the terms in your contract. If you can meet the financial obligation now with the existing rates, then that would be the most suitable course.Using debt as a means to get out of debt is never really a good way to pay off a loan since it is a cycle that’s not often broken easily. Getting out of credit card debt is pretty much like reverting to a lifestyle without all the benefits of purchases made on credit. You would have to totally rework your finances and life to be able to get out of that mire.As said earlier, a 0 balance transfer should only be seen as a way for you to consolidate your debts and prepare financially. It has its drawbacks and they usually rear their heads when the promotional period ends. This often comes at a higher interest rate.To be sure, consult a financial planner who’d take your interests at heart. Choose one who can show this to you with all transparency. The Internet is rife with advice that only bring you deeper to debt for the simple fact that your best credit cards problems help make these people earn a quick buck or two.These 0 balance transfer services are in it to make money and are not there to ease you out of your financial problems. If you aren’t careful and if you don’t read the fine print, you just might end up with higher interest that would just bring you deeper into debt.At the end of the day, these credit card balance transfers are a way for credit card companies to get more customers. Yes, they could be a solution but only if you exert financial prudence and do so with the intention of paying off your earlier bills. When used inappropriately, such as the purchase of more luxury and unnecessary items on credit, it could actually give more problems than solutions.