Arizona residents who would normally avoid a credit card with a high interest rate may be pulled in by seemingly attractive programs offered by credit card issuers. However, many of these incentives do not live up to people’s expectations, and they can make it very easy for people to end up with unmanageable credit card debt. In some cases, people end up so burdened that they open new credit cards to use them to pay the minimum balance on other cards.

One of the more popular programs that issuers offer enables people to do free balance transfers with a zero percent interest rate for a certain period of time. However, after that introductory time expires, people are still saddled with large amounts of debt that are only growing due to interest rates. Additionally, if someone makes a late payment, not only can it prematurely end their interest-free period, it can also lead to an increase in the interest rate on their card. Since the interest rate for new credit card offers is now in excess of 15 percent, this can represent a substantial amount of money.

Another issue with zero-percent interest rate offers is that card companies will often apply people’s payments to their interest-free balance transfer instead of new charges. This means that while their payments are being applied to debt, charges that accrue interest will continue to grow larger over time.

Thanks to high interest rates, credit card debt can accumulate quickly. Even if someone is making regular payments, ever-increasing debt can make it seem impossible to catch up. Bankruptcy or other forms of debt relief may enable individuals to eliminate or restructure their obligations and get their finances back under control.

Source: Main Street, “Seductive credit card offers, sneaky debt”, Juliette Fairley, November 12, 2013