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Are zero interest credit offers a smart fix for credit card debt?

A recent survey suggests that zero percent credit card offers are on the rise. It is estimated that up to a quarter of all credit cards currently available offer some type of no interest promotional introductory rate. Many Michigan consumers may believe that such a deal can help them to regain control over a spiraling crisis of credit card debt, but experts suggest that this might be yet another case in which something looks too good to be true and in reality isn't.

Consumers should keep in mind that the deck is stacked against them when it comes to zero interest offers. The card issuers make these offers in order to bring in new consumers, in the hopes that they will rack up high levels of debt before the rate jumps. For all but the most highly disciplined of borrowers, that is exactly the end result.

Consumers should also know that just because an offer comes in the mail, there is no guarantee that the borrower will be approved for a new card. Credit issuers want borrowers with high credit scores, and can afford to turn away those who don't meet the mark. Your credit rating could fall based on multiple applications for no-interest deals.

In addition, the devil is often in the details in regard to these offers. If a borrower's credit rating declines during the introductory period, the rate granted when the zero interest offer expires can be staggeringly high. It is also wise to know that many of the bonuses and incentives that are offered with new cards are not worth the high debt that it takes to acquire them, such as incremental cash-back offers.

Many Michigan consumers who are facing high levels of credit card debt feel the need to take control of their finances, and look to these types of offers as a potential solution. However, when a borrower's total debt far outpaces his or her ability to repay that obligation, it may be time to consider a personal bankruptcy filing. While each situation is unique, filing for personal bankruptcy under the guidance of a professional advisor can sometimes be one of the best financial decisions that an individual can make.

Source: CNBC, "Zero Percent Credit Cards Are Back! Five Warnings," Janna Herron, July 31, 2012

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