Should you switch to a 0% interest credit card? The answer seems simple, right?
But, before you switch, think about why the credit card companies make these offers. Are they trying to help a family struggling to get out debt? Nope.
The card companies, such as Visa, MasterCard and American Express, are publically traded companies who answer only to their shareholders. They are corporations, not charities, and they see big profits to be made with 0% interest offers.
Consider this, in October 2018, CNBC reported that in the third quarter (3 months) of 2018, Visa more than doubled their net income from the same quarter in 2017. They earned almost $2.85 billion in three months, which is almost $34 million a day. Yikes.
The Harvard MBAs at these companies have figured out that it is very profitable to offer 0% interest on balance transfers. Think about that, Visa makes a profit “lending” people money at 0% for up to a year.
While people switch their credit card balances because they want to save money, there are two major downfalls with this idea:
Downfall 1: The 0% interest is ONLY for the balance transferred. All NEW purchases are charged about 14% interest or more.
Downfall 2: The 0% interest is good for a limited time and once that passes, you will be right back to paying very high rates on your remaining balance.
Based on Visa’s profits, the majority of people who switch to 0% interest cards still end up paying lots of interest. The best way to pay off debt? Just pay it off!
If you need help, contact Capital Budget Strategies, LLC, Austin’s best Money Coach. For only $149, we will help you determine your net worth, set up a personal budget, create an Emergency Fund and build a Snowball Debt Repayment Plan to become debt free.
There is no trick to paying off debt, no magic pill to take, no special diet, simply there is no easy way out. What you need to do is either (1) Increase your income or (2) Lower your expenses. It won’t be as easy as making all those credit card purchases, but our
Austin Financial Coach will help you figure it all out.
Give Capital Budget Strategies, LLC approximately 4 hours of your time (the time it takes to watch the Super Bowl) and we will get you started on becoming debt free!
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