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Balance transfers can relieve Tennessee credit card debt

Like millions of Americans, many Tennessee residents have amassed considerable long-term debt. With more than $7,100 in credit card debt, the average household will pay thousands of dollars in pure interest. Owning multiple credit cards seems to be part of the problem, with debtors transferring money from one account to another to keep the combined debt in the card account with the lowest interest rate. Many financial experts suggest that the idea is right, but the execution is often wrong.

Yes, balance transfers can help many debtors lower their credit card debt and save on interest payments. The trick is to use the promotional period wisely. Many credit card companies now offer lower interest rates for around 18 months on balance transfers, largely because the credit card market has become so competitive throughout the national consumer market. If a credit cardholder transfer balances to those lower interest rate cards, they need to be able to pay those cards off within the specified period.

This is where planning is critical. Calculate the new balance at the new lower rate and see whether payoff is not just possible, but also probable within the introductory period. If it is, then make and hold to a plan that pays off the account in that period. Remember to include any transfer fees -- and look at the anticipated rate once the introductory period ends. Any balance left will automatically swell by that interest rate.

Many debtors who consider this strategy first consult legal and financial advisers to help them determine whether the options are worth the risk. In rare cases, cardholders in the worst financial distress can even convince credit card issuers to help them formulate plans to eliminate their account debt. To those issuers, some return is better than nothing, especially if a cardholder ends up in bankruptcy.

Source: The New York Times, "Credit card balance transfer can reap savings if done cautiously," Ann Carrns, Feb. 20, 2015

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Kenneth C. Rannick, P.C.
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