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Mistakes to avoid if using balance transfers for credit card debt

Many Tennessee consumers are facing financial challenges; just check the amount of credit card debt they carry. It's not uncommon for many to pay interest rates of 20 percent or more, making it difficult to pay down these debts. So when a tempting balance transfer offer comes along -- offering 0 percent interest for 6, 12 or even 18 months -- it's hard to say no. Although a balance transfer can offer benefits, it can also have an opposite effect and cause a consumer to sink even deeper into credit card debt. Find out which mistakes to avoid in order to use such an offer to one's advantage.

The first step is to find the best offer. Zero percent interest for six months may sound like a good deal, but it's not the best. It's not too difficult to find offers that last a year or longer, so choose one of those, if possible. It's always better to have a longer period of time to pay off a debt.

Do the math before committing to a balance transfer offer. There are fees associated with these offers - typically 3 percent of the amount. While that might not seem like a lot, it could end up being more than the interest a consumer is currently paying if he or she can pay off the balance in a short time -- like 3-4 months. For those who need a year or longer to pay off the debt, though, the fees will definitely be much lower than the interest accrued.

The key to making a balance transfer work is paying it off before the promotion expires. If this doesn't happen, the consumer must then pay the interest on the balance - and this could lead to further debt. Consumers must be disciplined and should not use this time to accumulate additional debt. Credit card debt is easy to get into but hard to get out of.

Source: Consumerist, "3 Mistakes To Avoid When Making A Credit Card Balance Transfer," Chris Morran, Jan. 23, 2015

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