With credit card companies using every tactic that they can think of to lure us into new debt, consumers are finding themselves in serious danger of financial insecurity.  The advertising is everywhere.  They are even telling us that they will “help” us with the mounting credit card debt by offering to take on our balance from another company and give us zero percent financing.  What they don’t tell you are the pitfalls associated with these zero percent deals.

One of the most common dangers involved with these offers are in the fine print.  They don’t make it obvious to the consumer that if they are late on even one payment the deal is off and you now have to pay up to 30% interest on your entire balance.  Even on the previous purchases you have made.  Also, and perhaps the most insidious consequence of a late payment is the relatively new concept of “universal default.”

Universal default is a mechanism the credit card companies use to not only raise you interest rate on your zero percent card.  But, all your other cards interests rates can also be raised.  By starting with a zero percent card to help with your balances on other cards, many consumers find themselves paying more than they would have if they had just kept the cards they had and paid down the balances.

There are benefits to the zero percent offers.  If used correctly they can be a useful tool to relieve yourself of increasing debt due to rising interest rates.  But with the practice of universal default, customers can actually find themselves in dire financial circumstances.  Universal default can affect everything from the interest rates on all your cards; they can also make it difficult to get credit that you actually need.  Even your insurance rates can be raised through the practice of universal default.  You get yourself into credit card trouble by breaking the rules of the zero percent financing deal and find yourself not only paying huge amounts of interest but you also pay more for your auto insurance and even have to pay expensive deposits to even turn your utilities or cable TV service.  All consequences of universal default.

If the consumer does use the zero percent offer responsible they can use them as a good tool to turn around their finances.  If you take your high interest balances and transfer them to a zero percent card you can save a lot of money.  But, only if you are diligent in being a smart consumer.  Make sure that you understand all the aspects of your agreement.  The credit card companies are relying on the fact that most customers will break the regulations and end up paying for the privilege of being in debt.  

Zero percent is really just a marketing ploy.  It is another way for credit card companies to get their hands in your wallet. Be careful and you can come out on the beneficial side of these offers.  Be complacent and you will find yourself in serious danger.