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Handling credit card debt: Balance transfers

Debt can be one of the most stressful burdens an individual or family can carry. Here in Florida, the average family carries a considerable amount of debt, including mortgages, medical expenses and the most insidious of all: credit card debt. Thankfully, there are a variety of ways for residents to handle that debt creatively, from renegotiating interest to Chapter 7 bankruptcy, that can help make debt manageable.

One such tactic is the balance transfer. Simply put, a balance transfer is a way banks use to move accrued debt from one credit card to another, often charging a minor transfer fee. In this way, one credit card is "paid off" by another, a move that can be beneficial to the debtor in certain situations. Of course, it is important to remember that in some cases, a balance transfer is nothing more than a lateral move when it comes to cutting down debt.

If an individual is carrying considerable debt on a high-interest credit card, a balance transfer might be helpful. Many credit cards offer a zero percent APR introductory period in which no interest is charged on the card for up to a year. Moving a balance from a high-interest card to a new card can save the debtor a years' worth of interest, in some cases giving him or her the time to pay down the debt altogether without worrying about interest payments. Of course, this is not always the case, and debtors should do their research before agreeing to a balance transfer.

Not every tactic will work for every family. Here in Florida, some households are so paralyzed by credit card debt that no amount of debt shuffling will help get them back on the road to financial health. Thankfully, with the support of an experienced attorney, those individuals can seek out other options that may work better for them, including a Chapter 7 or Chapter 11 bankruptcy filing that can work to restructure or even discharge certain debt altogether.

Source: journal-news.com, "Credit card balance transfers: Here's how they work", Eric Rosenberg, May 8, 2018

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