Latest news with #credit card companies
CBS News
4 days ago
- Business
- CBS News
What happens if you don't pay off a balance transfer in time?
A 0% balance transfer offer can feel like the answer to your problems when you're struggling to pay off high-rate credit card debt. These promotional periods offer you the opportunity to press pause on the credit card interest charges and focus solely on eliminating the principal balance. For many, that window of time is just what they need to finally make meaningful progress toward paying off debt that would otherwise balloon as the compound interest charges accrue. But unfortunately, the breathing room offered by a balance transfer credit card doesn't last forever. The promotional period typically lasts from 6 to 21 months, depending on the card and the offer, and once that promo period ends, the regular APR kicks in. And, if you haven't paid off the transferred balance in full at that point, the cost of your remaining debt can spike dramatically. So, while these offers can help you save money, they can also backfire if you're not careful. That's why it's important to understand exactly what you're signing up for when you take advantage of a balance transfer offer, as well as what could happen if you fail to pay it off in time. Find out what strategies you can use to get relief from your high-rate debt. When your balance transfer promotional period expires, several costly consequences can kick in almost immediately. And, they could wipe out the very savings that motivated you to transfer your balance in the first place. The most immediate consequence of not paying off your balance transfer by the end of the introductory period is interest — and often, a lot of it. Once your 0% APR expires, the card's standard APR kicks in, which can be anywhere from 18% to 30% or more, depending on your credit profile and the issuer. When that happens, the remainder of your unpaid balance is typically charged interest at the regular rate. That could add hundreds or even thousands of dollars in interest to your balance if the remainder of what you owe is large enough. Some cards also charge deferred interest on the remainder of the balance. That means if you don't pay off the full amount by the end of the promo period, you may be charged interest retroactively at the regular APR on what you owe, and it's calculated from the original date of the transfer. That can come as an unwelcome surprise. Your credit score could take a hit as well. For example, if your balance transfer card is maxed out and you're unable to make progress on paying it off, your credit utilization ratio may remain high, and that could drag down your credit score over time. Explore the debt relief options available to you today. If you're in the middle of a balance transfer promo or are considering one, it's crucial to have a plan in place for eliminating your debt before time runs out. Here are a few strategies that can help: Take the total amount you transferred and divide it by the number of months in your 0% APR period. That's your monthly payment goal. For example, if you transferred $6,000 to a card with an 18-month promo period, aim to pay at least $334 per month. Set up automatic payments if possible to stay consistent. Look for areas in your budget where you can trim back temporarily, whether that's dining out, subscriptions or travel, and redirect those funds toward your balance transfer. Even an extra $100 a month can help you shave months off your repayment timeline. New purchases on a balance transfer card may not qualify for the 0% intro APR and could accrue interest immediately. That means even if you're paying down the transferred balance, interest could still be racking up on the new charges. So, keep the card focused on repayment only. If you're struggling to pay down your balance before the promo period ends, or you're dealing with multiple high-rate credit cards, it may be time to explore your credit card debt relief options. These include: A balance transfer card can be an incredibly useful tool for managing credit card debt, but the effectiveness relies heavily on your plan to pay it off. If you don't pay off the transferred balance before the 0% APR period expires, you could be hit with high interest charges that undo your progress. So, make sure you understand the terms, stick to a payoff plan and consider alternative relief options if the debt feels unmanageable. When used right, a balance transfer can help you break free from interest. But if you're not careful, it could just delay or even worsen your debt challenges.
CBS News
22-07-2025
- Business
- CBS News
Want to qualify for credit card debt forgiveness this August? Don't do this.
It's understandable if the idea of having a large portion of your credit card debt forgiven sounds too good to be true. After all, in today's still sticky inflationary climate in which the rate rose in the last two months and in which elevated interest rates are making borrowing cost-prohibitive, it may feel like there are few viable options for regaining your financial health. But if you're stuck with high-rate credit card debt, forgiveness may be the solution you desperately need now. For qualified borrowers, a credit card debt forgiveness program (also known as debt settlement) can help reduce your balance by 30% to 50%. That's real relief that can be the difference between financial independence and remaining mired in high-rate debt indefinitely. But if you want to qualify for a credit card debt forgiveness program, it's important to start by understanding eligibility. This may require making some select moves now, especially if you're looking to be approved to start the plan this August. And it may require avoiding some missteps, too. In other words, if you're looking to qualify for credit card debt forgiveness this August, it's equally important to know what not to do. Below, we'll break down what you need to know now, this July, that can help you qualify before August 31. See how much of your credit card debt could be forgiven with a program here today. While the following list is not exhaustive, by avoiding these three seemingly innocent (but costly) mistakes, borrowers can improve their chances of being approved for a debt settlement program. It may seem counterintuitive to stop making payments on your credit cards when trying to get debt relief support. But that's what will be required if you're looking to qualify for forgiveness. Consider halting your payments, then, whether they be automated minimum ones made each month or those you make independently. By making your payments, even if they're doing little to reduce your overall debt, you're demonstrating an ability to pay to the credit card company. Sure, this may take months, years or even more than a decade to pay off what you owe in full, but making payments implies an ability to make some sort of progress, thus reducing your likelihood of being approved for forgiveness. And, yes, halting payments will damage your credit score, but if you need the help credit card debt forgiveness offers, the majority of that damage may have already taken place. Learn more about the credit card debt relief options available to you now. One of the key ways to qualify for credit card debt forgiveness involves demonstrating an inability to pay. If you have a medical issue that's hurt your ability to earn an income, a job loss that has left you without a viable income stream or something else entirely, you'll need to prove it to qualify for help. So don't throw away your medical bills, proof of job loss or anything else that clearly illustrates your current financial circumstances. Sure, you may be able to request copies of the paperwork needed here, but that could take weeks or even months to secure, delaying your forgiveness approval comfortably past August and potentially well into the fall. You'll typically need $7,500 to $10,000 worth of credit card debt to be approved for a forgiveness plan. But if you don't have that much, increasing your debt load to meet that threshold isn't the right move. Remember, forgiveness will only cover 30% to 50% of what you owe, so you'll just be causing your debt load to increase unnecessarily. Additionally, with alternatives like debt management programs, credit counseling and debt consolidation loans (among others), there are multiple debt relief alternatives available and worth exploring if you don't have enough debt to qualify for forgiveness. This is a good problem to have as it means your debt situation is more manageable than others, so use that to your advantage and avoid racking up additional debt to meet the forgiveness threshold requirements. This summer could be the smart time to start the delayed work of getting out of high-rate credit card debt and regaining your financial independence. If you're focused on qualifying for a forgiveness program, however, avoiding these mistakes can help you become a more attractive candidate for debt relief companies. The key here, however, regardless of whether it's via a forgiveness program or some other debt relief service, is to be proactive and to take action. It likely took a long time to build up your balance, and it will take time, effort and due diligence to dig out of that financial hole, so starting that process as soon as possible makes the most sense now.
