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Strategies & Market Trends : Z Best Place to Talk Stocks -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (49380)	10/8/2003 6:28:21 AM
From: DanZ	Read Replies (2) \| Respond to of 53068

<Ends meet defined as meeting current payment obligations for a given month> I'm sure there's some of that, but I don't think that is the primary reason that people seek lower interest rates on their debt. Economics drive people to pay less for the same or more. Isn't that why low rate balance transfer options are popular? <I'd roll it out 12 months with a zero% transfer offer and pay the damn debt off before the 12 months were up.> I'm not aware of any 0% twelve month offers. I have seen creditors offer 0% to 7.9% for six months, but they often include transaction fees that increase the cost of borrowing up to 3%, albeit typically up to a maximum of $50. So let me rephrase my point. Is a, b, or c better: a. Pay 15% to 18% interest. b. Pay 5.9% for six months with a $50 transaction fee. Roll the debt over when the introductory period expires, or pay 15% to 18% on the balance. I doubt if many people can pay off the entire balance over a six month period unless they roll it over to another creditor. There's no guarantee that rates won't increase by the time the introductory offer expires, and there's no guarantee that low rate balance transfers will be available even if rates remain low. c. Pay 7% on a home equity loan, which is fixed over the life of the loan and has the added benefit of being tax deductible, which lowers the effective cost of borrowing even more. I agree that it would be better if people carried less debt, but isn't that one of the effects of low interest rates? When the cost of capital declines, individuals (and corporations) borrow more, which is one factor that helps turn around a slowing economy.