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Payment Plan?

Question: I'm a grad student on a very tight budget. I worked for a few years before coming back to grad school, and unwisely brought some credit card debt back to school with me. I've been shopping for a new credit card to roll that high interest balance to a new account that would hopefully be 0% interest for the first year. I believe I could make a much bigger dent in the debt with zero APR.

Yesterday, my credit card company called and suggested a payoff plan. They want to direct-withdrawal money from my checking account each month, and they claim they will give me 0% interest on a 5 year pay off. Is this some sort of gimmick? What kind of questions should I ask to make sure it's legitimate? thanks! Josh. Boulder, CO

Answer: This is a new one for me. I hadn't heard of a credit card company doing this before (and I plan on checking it out some more). I wonder if this offer reflects a shift in tactics, moving from raising customer rates to working with them on a payment plan?

For the moment, let's assume everything is on the up-and-up. I would have two questions. First, is there a fee attached to the program? Secondly, and more importantly, you can do this on your own without locking your self into the credit card company's program. After all, you say you are on a tight budget, and I would imagine every once in awhile you might have to pull back from paying off the credit card debt. It's a good idea to put yourself on a payment schedule, but I would do it on my own, which is remarkably easy in an era of online banking and automatic transfers. But I would stay in control. I'd worry about giving up financial flexibility.

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