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Credit Card Debts and Balance Transfers

Many people take advantage of zero interest offers for balance transfers of credit card debts from one card to another.  This happens often with couple when contemplating a divorce situation.  The Consumer Financial Protection Bureau recently warned that consumers are not properly informed of the dangers of zero-interest balance transfers, according to an article in the September 19, 2014 issue of The Week which quotes The Wall Street Journal and Credit.com.

Such balance transfers can cause a boost in interest rates for new purchases on the new card.  Additionally and more importantly perhaps, if the balance is not paid off during the promotional period, the interest rate imposed could be substantially higher than that charged on the original card. 

What many consumers also do not know is that credit card companies usually charge a fee, typically 3% of the transferred amount.  This cost must be factored into the decision.  Because the distribution of debt is part of equitable distribution in a divorce case, a looming boost in interest rates should be considered in dividing the assets and liabilities and establishing a pay off schedule.

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Mercedes R. Wechsler, P.A.
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