No balance transfer Catch 22 is more insidious than default. Essentially, default occurs when you fail to pay your bill on time. When this occurs, your 0% interest rate is voided and you can be charged anywhere from 11% to as much as 29%, depending on the specific terms of your credit card company.
In the past, it was often possible to negotiate your way out of credit card default. However, over the past year, credit card companies have been seizing every opportunity they can to raise interest rates on consumers.
What can trigger credit card default? As absurd as it sounds, sending in your payment one day late can be enough to send your interest rate from 0% to 30%. Similarly, going over your credit limit may trigger the same penalty.
Fortunately, avoiding this Catch 22 is relatively easy: simply pay your bill on time. In fact, pay it early, just in case. However, many of us are having a hard time keeping current on our bills. If that is the case, it is important to prioritize your expenses. If you can put off a cable bill and use the money to pay your credit card bill, by all means do so. Going in default on a $5000 credit card balance can cost you as much as $1500 in interest. Paying your cable bill late may mean watching more network TV than you are used to. However, that is a small price to pay in comparison to cost of defaulting on your credit card.
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