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Balance transfers are not always a good idea

Balance transfer credit cards with zero percent interest rates are very attractive, especially during the holidays. Transferring debt from a high-interest rate card to a zero percent card can help the consumer pay off the debt faster. Wisconsin residents should take note, however, that strategy can sometimes do more harm than good, leading to financial challenges, more debt and creditor harassment.

Zero percent balance transfer credit cards can be a good deal for consumers. Yet, balance transfers may not be the best option for everyone, because the zero percent rate is usually just temporary and may last for only a few months. And there are other important things that debtors need to consider before taking such an offer.

Although balance transfers carry zero interest rates, having another credit card basically means the ability to incur more debt. Transferring the debt to a card with low interest can be a good idea when the consumer retires the old card. Financial trouble may arise if, after the transfer, the debtor accumulates more debt on the old card.

The zero percent balance transfer is not always free; many cards charge a transfer fee. A three percent fee is typical, but the charges vary.

If they are careful, Wisconsin residents can sometimes get a lower interest rate and temporary debt relief from zero interest balance transfers. However, if they are seeking long-term relief from overwhelming debt, Chapter 13 bankruptcy may be a more viable option.

A Chapter 13 bankruptcy can reduce interest payments and credit card debt. With Chapter 13 bankruptcy, the cardholder can repay the debt through a manageable repayment plan. An experienced personal bankruptcy attorney can evaluate an individual's situation and help them choose the best option.

Source: NBC News, "Before you get that balance transfer credit card, consider this," Rob Berger, Dec. 11, 2013

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