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Use 0 percent interest transfers to your advantage

Are you trying to rebuild your credit through the use of balance transfers on credit cards and other strategic financial moves? Transferring balances from very high-interest cards onto lower-interest cards is generally a wise choice, as long as you can afford to pay off the debt in a reasonable amount of time. When you transfer to a 0 percent card, however, some stipulations prevent you from making new purchases until the initial balance is paid off. What happens if you accidentally purchase something on this new card?

Even if you accidentally buy an item with your 0 percent interest card, you can recover. Fair credit reporting practices laid out by the government require card companies to apply any money above the minimum payment to the highest-interest portion of your debt. That is, if you have a minimum payment of $15 on a balance transfer card, any amount over $15 will go toward the higher-interest rate purchase.

The key to this concept is to remember that the money you pay for the minimum payment will not be allocated to your high-interest purchase. You must pay above and beyond that minimum payment in order to clear the undesirable debt. Make a payment, then, that totals the amount of the purchase plus the minimum payment. You can calculate a minimum payment through a variety of Internet tools, or your creditor can help you come up with that amount.

To avoid accruing additional debts on the 0 percent interest card, simply leave it at home. It is best to prevent yourself from adding an even higher debt burden as you are attempting to pay off a large balance. After all, that is the point of the low-interest option.

If you are struggling with juggling debts and a revolving door of creditors, consider seeking assistance from a qualified bankruptcy attorney. These professionals can help you learn more about your legal and financial options, up to and including bankruptcy.

Source: www.foxbusiness.com, "Oops! I bought something with my 0% balance transfer card" Jane McNamara, Jul. 17, 2013

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