The hazards of using a 0% balance transfer credit card!


Even though the credit crunch slowed the 0% balance transfer offers I get in the mail, I recently found a good offer for 12 months of zero interest. When the card came in the mail last month, the first thing I did was stick a big "DO NOT USE" post it note on it. While this may seem like a dumb idea if you haven't been slammed by the biggest catch relating to balance transfers, it's the best thing you can do.

For the most part credit cards operate by applying your monthly payment to the portion of your debt with the lowest interest rate; in this case 0%. While your monthly payments are chopping away at the balance transfer offer, your new purchases will begin racking up finance charges almost immediately. This means that even if you only spend $10 on your balance transfer card you'll be accruing interest charges on it until you've paid off your hefty transferred balance.