 Using
zero-percent credit card offers
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 Dear
Dr. Don,
I have a zero-interest credit card with a $6,000
balance that I opened nine months ago. I transferred a previous
balance to this credit
card. The zero-percent interest will expire in three months.
If I open another zero-percent interest card and transfer this balance,
how important is it to cancel the previous card? Also how might
this affect my credit score? Thanks. -- Bob Bounty
 Dear
Bob,
As short-term interest rates continue to head
higher, it gets more and more expensive for the credit card companies
to make these zero-percent balance transfer offers. They do it to
win your business, and if all you're going to do with them is take
advantage of the no-interest period, then winning your business
doesn't do much for them.
That doesn't mean you shouldn't take advantage of
a balance transfer to another card with zero-percent interest, it
just means that you need to carefully read the credit agreements
for both cards and understand what it costs to effect a balance
transfer and what could cause the terms of this offer to change.
The Bankrate feature "Take
care with your zero-percent credit card" discusses zero-percent
credit cards in greater depth while the Bankrate worksheet "Step-by-step
guide for transferring credit card balances" helps you
manage the balance transfer process.
Every time you apply for credit, a credit inquiry
shows up on your credit report and stays there for two years. A
lot of credit card inquiries will hurt your credit score, especially
if you keep applying and getting turned down for credit cards. One
credit card application a year isn't excessive if you're not applying
for other types of debt.
If you're not paying an annual fee on the existing
zero-percent card, then it makes sense not to close the old account.
Your credit score is based on the information in your credit report.
The age of your account relationships is important, as is the ratio
of credit outstanding to credit available. According to myFICO.com,
closing unused accounts isn't a good short-term strategy for raising
your credit score.
Zero-percent offers can help you manage your
finances by freeing up cash in your monthly budget, to pay down
this debt or other debts. Using the offers, instead, as an excuse
to not pay down debt, or to increase current spending, means that
you'll still have that outstanding balance to worry about when the
new offer expires. Work on getting off the debt treadmill.
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