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The Credit Guy Wednesday, August 14, 2013

Use caution when assuming debt


Todd Ossenfort: Be careful when assuming debts of others. When you assume debt, their debt becomes your financial responsibility.

Dear Credit Guy,

Can I transfer my partner's credit card balance to me on a zero interest rate balance transfer card?-- Cara

Todd The Credit Guy - Response:

Short answer is yes, you can transfer a balance from someone else's credit card to your own. Your creditor will be happy to earn any interest that you are willing to pay -- most people do not pay off the balance transferred before the zero percent interest rate expires.

My question to you is why are you willing to take on the financial responsibility of someone else's credit card debt? I realize the person in question is your partner, but you are still taking on a financial responsibility that is not yours. I am assuming that the card with the zero balance transfer is in your name only. If I am correct, that means that you would be the sole party financially responsible for the amount transferred. Before you do so, I would strongly recommend that you review your finances and be certain that you can afford the additional obligation.

It could be that your partner is planning to make the monthly payment on the zero balance transfer credit card and you both are simply making this move to save money in interest charges. However, life happens and your partner could suffer a job loss, you and your partner could separate or any number of other things could occur that may mean it would be impossible to make the monthly payment as planned. Then, you would be responsible for making the payments. Worst case scenario: If you are unable to make the payments, your credit history will sufferand you could face aggressive collection procedures and legal action.

There are a couple of other things I'd like to mention for your consideration. I encourage you to shop around for the best credit card to use when transferring the balance. You will want to determine what the interest rate will be once thezero transfer rate expires. Again, life happens, and you may not be able to payoff the balance before the rate expires, so you will want a competitiveinterest rate once it does. Also, find out what fees will be charged for thebalance transfer. You can do a quick comparison of current offers by card issuers on this site.

Ifyou decide to go through with the transfer, my last bit of advice is to makeyour best effort to pay off the balance before the zero interest rate periodexpires. The sacrifices that you may have to make in the short term to get thedebt paid off will be well worth it when you no longer have the monthlyobligation.

Take care of your credit!

Todd Ossenfort, The Credit Guy