Credit-card solicitations may promise something like “zero percent interest for the life of the loan.” Before you switch your balances to such a card, be wary. These deals may contain:
* Required minimum use of the credit card each month. Then your monthly payments go to pay down the zero-rate balance transfer. You’ll wind up with high-rate debt on the new purchases. For the numbers to work in your favor, you need to be transferring large balances to the new card, where the use requirements are minimal.
* High fees on everything from the balance transfer to late payments. Hefty fees could wipe out the savings the zero interest rate should give you.
* Super-high rates if you’re a day late or dollar short in making your payments. In some cases, a “universal default clause” is in effect: if you are late on any payment to ANY creditor, you’ll owe a default rate. So you could pay the credit-card bill on time each month but if your phone bill gets hung up in the mail, your card issuer can charge you interest up to nearly 30 percent per year.
