05 Jun Balance Transfers and Self Deception
Most of my clients have struggled to pay off their debts for an extended period before coming to explore bankruptcy. Many have devoted enormous time and energy in moving credit card balances from one card to a new card with a lower interest rate. They have spread sheets and special calendars to manage, not their money, but their debt.
You can bet that credit card companies make such offers because they are confident that at the end of the interest free period, the customer will still owe money on which they can charge interest. If not, there would be no reason for the offer. All too often the card from which the balance was transferred is used again, and now the total debt is greater still.
My fundamental gripe with the balance transfer game is that more energy goes into playing the game than fixing the underlying debt problem. It gives debtors the sense that they are “doing something” about their finances. That activity has more in common with self deception than financial cure.
All too often credit card offers simply allow consumers to delay confronting the fact that they will never be able to pay off the debt that they are juggling. Every month that goes by where they make credit card payments rather than set aside money for emergencies or retirement is a month lost. The older the debtor, the more costly the loss of that month.
Without a well grounded belief that in the foreseeable future, the debt can be paid off in full, the monthly balance transfer exercise simply masks the truth.
Cathy Moran, Esq.
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