I speak with many homeowner’s who play the transfer debt
every 12-18 months. While these promotions appear attractive, many of these
creditors trap you on the back end with transfer fees. Upon doing some
research, I’ve found some of the transfer fees are as high as 4-5% of your
total balance transferred.
Some things to bear in mind is if you have a good equity
position in your home. You are always better to roll your credit card debts
into a mortgage. Why? Because interest paid on your mortgage is a tax deduction
while credit card interest is not. Furthermore, interest on your credit cards
are compounded DAILY. Every time you transfer your debts to a new card, you
incur extra costs. The reality is, it can become human nature to pull out your
credit card. Even with balances paid off, you end up with multiple credit card
inquiries and extra room to charge up more debt. “they hope to lure you in and
get you to pay interest once your introductory offer expires” (Johnson, 2019).
Falling into this
trap, you eventually bury yourself in a deeper hole. The debt isn’t going
anywhere except under a new creditor. Installment debt is looked upon as more
secure than revolving debt. Thus, having the additional tax credit on your
mortgage is a better payoff. Not to mention, you no longer have these tempting
open lines of credit to incur more transactions.
Reference
Johnson, H. (2019, January 25). The Simple Dollar. Retrieved
from Six Facts You Should Know About 0% APR Credit Cards:
https://www.thesimpledollar.com/credit-cards/blog/six-things-to-know-about-0-apr-credit-cards/
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