In any neighborhood I visit across the country, I continue to find people playing the "credit card balance transfer game." We all know that American like to spend money with credit, and when the rates go up, people seem to think that transferring their credit card balances to new credit card companies will help solve their debt problems. Banks who issue credit cards enjoy offering low intro rates to get your business. Once they have your business, look out, because the honeymoon will probably be a quick one-night stand. The credit card companies tend to increase the interest rates rather quickly. One other problem with the balance transfer game is that once your balance gets large, many companies issuing credit cards wont accept the balance transfer or if they do they will accept it at a higher rate. If you own a home, then I suggest you considering a debt consolidation loan or second mortgage. Homeowners should take advantage of low mortgage rates. Another great reason to pay off the credit card debt with a secured home equity loan, is the bonus you get with the tax deductions allowed with a home mortgage on a primary residence up to 100% of the homes value. Im not an accountant, but in my experience, credit card interest would not be a tax deduction unless it the debt was converted to a mortgage. If you do take my advise and get a debt consolidation second mortgage, then request a fixed rate term when you talk to your loan officer. Many people are hot and heavy for the home equity lines of credit, but interest compounds like the credit cards so you could find yourself in the same position you are trying to get away from. Keep it simple and get the fixed rate loan. The fixed rate amortization will allow you to set reasonable financial goals with obtainable time-lines and become debt free. |
